Household appliance insurer
At the time of the
Advent has offered 1425p per share in cash to D&G shareholders. That is a premium of 25.7% to the 1134p share price on May 17, the last day before Homeserve first expressed an interest in the group.
Advent said it hoped to expand the business internationally as well as in the UK. D&G currently insures six million household appliances from breakdown for circa four and a half million customers. It sends out 49 million items of ‘junk mail’ each year to potential customers.
The private equity firm is putting in £140m of equity, leaving the remaining £384m to come from a debt facility underwritten by adviser Goldman Sachs. That is a just under 10 times last year’s earnings before interest, tax, depreciation and amortisation (EBITDA) of £39.9m.
The company already has debts of £318m, so this is impressive indeed. If this financing can be achieved, it makes one ask: credit crisis, what credit crisis?
HSBC advised D&G, with Hawkpoint providing a fairness opinion. Collins Stewart was D&G’s broker. Goldman Sachs and Dresdner Kleinwort acted for Advent.