The board of UK insurance company Cox Communications has recommended a £297.9m cash bid for the company from Fieldstreet (Acquisition). On completion, Fieldstreet will be indirectly owned by funds under the management of Englefield Capital and Duke Street Capital V. Neil Utley, who was chief executive of Cox until June 2004, is also backing the offer for the entire share capital at a price of 92p per share. A further 2p per share is payable if the offer goes unconditional.
The price represents a premium of approximately 44.6% to the closing price of 65p per share on November 5 2004, the last business day prior to the announcement by Cox that it was in discussions that could lead to a bid. The premium is 8% over the 87p closing price on April 27, the day before the bid was announced.
Warburg Pincus and Palamon, which jointly control 33.3% as Cox’s largest shareholders, have undertaken to accept the offer. In all, Fieldstreet has acceptances representing 35.9% of the existing issued share capital.
Cox restructured to focus on retail insurance in 2002. Since its interim results in September 2004, it has rationalised its business by discontinuing non-profitable, non-core activities and has reduced ongoing expenses.
Calyon’s leveraged finance unit is providing £273m in debt financing for the offer. This will refinance the existing debt of the Cox Group, provide working capital and cover the costs of the transaction.
Englefield is a private equity fund manager with assets under management of €706m. Duke Street is an independent private equity group focusing on mid-market leveraged buyouts of established UK and French businesses. It has raised five private equity funds to-date and has managed in excess of €2bn.