After a quiet start to the year in terms of public-to-private private equity backed transactions – just Alchemy Partners’ bid for Cedar plc in January and NeSBIC’s withdrawn bid for Beter Bed Holding of the Netherlands in February in the first quarter – this segment of the market appeared to be warming up as Q2 2002 drew to a close.
JO Hambro Capital Management started in April with a recommended cash tender offer to acquire 59.4 per cent (amounting to the shares it did not already own) in United Industries plc.
Then in May Electra Partners appeared on the scene with a GBP78.2 million offer for Kunick, followed two days later by Morgan Stanley Real Estate Fund IV making an offer of GBP199.7 million for Saville Gordon Estates, five days following this, on May 29, Alchemy launched a GBP50.75 million bid for FCX International.
Things got hotter come May 31 when Duke Street Capital took the unusual step of making a hostile public-to-private bid for Esporta, valuing the group at GBP133 million. That fell out of the limelight, however, when on June 17 US buyout firm Madison Dearborn Partners bid for Irish stock exchange-listed Jefferson Smurfit, valuing the company at GBP3.3 billion. Despite its size, other bidders may yet emerge.
Most recently announced is Clayton, Dubilier & Rice’s GBP433.7 million acquisition of Brake Bros, a food supplier for the catering industry. CDRP Acquisition, a specially created vehicle, will pay 825p a share in an unconditional offer as the Brake family, which owns 59 per cent of the shares has committed irrevocably to accept the offer.
Mark Vickers at Ashurst Morris Crisp says: “In recent weeks the mood of the PTP market has definitely been changing. Most private equity houses are searching out attractive investment prospects among relatively cheap listed stocks, particularly as the quoted markets continue to suffer further falls. Institutional investors are tending to focus on larger companies. Companies with a market cap of GBP1 billion are now listed as mid-sized and as such many smaller quoted businesses are out of favour with the market and therefore questioning the benefits of being listed.”
But at what price? See the September issue of European Venture Capital Journal for the six-monthly review of bid premiums in UK and Irish public-to-private transactions.