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Candover joins activists for Stork success

Candover has successfully revived its offer for Stork by working alongside activist investors opposed to its previous tilt at the Dutch industrial conglomerate.

Just over two months after an earlier €47 per share bid was withdrawn after opposition from Icelandic consortium LME, Candover has returned with a €48.4 per share offer, which represents an enterprise value of about €1.5bn.

Along with the price hike, Candover took the innovative route of working with LME, comprising Landsbanki, Eyrir Invest and Marel Food Systems, which holds a combined 32.16% share of Stork.

Marel had resisted Candover’s initial bid as it had been trying to buy Stork’s food systems division since 2005. As part of the new offer, Candover has agreed to sell the unit to Marel for €415m on a cash and debt-free basis.

Candover’s bid now seems destined to result in Stork’s delisting after a painful period in which the Dutch group has faced both messy legal action and calls for the replacement of its board.

Following reports of interest from private equity firms including Apax, Carlyle, KKR, CVC, CD&R, TPG Capital and Dutch investor AlpInvest, Stork decided a take-private would not reflect fair value – a move that angered US hedge funds Paulson and Centaurus Capital, which held a combined 32% stake.

A series of public letters calling for a break-up of the business led to a request by Stork to investigate claims of Paulson and Centaurus violating regulations by acting together before officially announcing a joint policy. An EGM in which a majority vote in favour of a break-up was rejected by the board resulted in a call for their replacement.

Candover’s initial approach at this point seemed to put it in the position of “white knight” and had both the backing of the board and the US hedge funds, but not LME. With backing from the board, Centaurs and Paulson and the LME consortium, the latest bid looks likely to be successful.

Failed public-to-privates aren’t new to the industry – HMV might now regret fending off Permira, while another target of the buyout firm, Misys, has followed its own path (see page 7) – and neither are activist investors new to private equity.

However, by working with rather than against the activists, Candover has shown one of the ways in which private equity can adapt and innovate during difficult times.