Notwithstanding the choppiness in public equity markets, buyout shops are finding spirited late-summer competition from industry rivals and strategic acquirers in a variety of industries, according to sister news service Reuters.
Among the sponsors in bidding wars are
Medical device maker Kinetic Concepts Inc. received a takeover bid Aug. 23 from rival ConvaTec Inc. that tops a prior offer from Apax Partners, but the wound-care company has concerns about the financing conditions in the new bid, sources familiar with the situation said. Kinetic Concepts, a maker of devices used in wound care, may not favor a higher offer by ConvaTec as the proposal lacks committed financing.
The new bid contains some conditions on financing that concern Kinetic Concepts, one source said. The bid does not have guaranteed financing, but instead has letters from Goldman Sachs Group Inc. and Jefferies Group Inc., saying they are “highly confident” that financing can be arranged, the source said.
Kinetic received the offer from ConvaTec on Aug. 21 exceeding a $5 billion bid from Apax Partners LLP in July. Skillman, N.J.-based ConvaTec had submitted its offer during Kinetic’s “go-shop” period, when the company can seek higher offers for 40 days. The period ended on Aug. 21. The new bid from ConvaTec is worth more than 40 billion crowns ($6.3 billion), the Swedish daily Dagens Industri reported, citing sources.
Kinetic Concepts is concerned that financing may be troublesome or expensive for the new suitors in the current volatile market, the source said. Kinetic Concepts could not be immediately reached for a comment. ConvaTec, owned by private equity firms Avista Capital Partners and Nordic Capital, could not be immediately reached for comment. Nordic Capital declined to comment, and Avista could not be immediately reached for a comment.
Meanwhile, in the retail sector, shares of discount chain 99-Cents Only Stores rose as much as 11 percent following a media report that claimed Apollo was preparing to bid for the chain, which struck a deal in March with private equity firm Leonard Green to offer $19.09 per share, or $1.34 billion, to take the chain private. The company is currently valued at about $1.17 billion.
The New York Post said it learned from sources that the Schiffer-Gold family, which owns about a third of the company, has recently hinted that it is willing to team up with the highest bidder, after being wooed by Apollo.
“At $19.09, the company is too cheap and it should certainly sell for quite a bit more,” Brian Macauley, a portfolio manager for FBR Focus Funds, said. The fund owns about 3.8 million shares of 99-Cents Only, and has been investors in it since 2004.
“We believe that $21.75 to $23.50 is kind of a minimum price range that a deal should get done it. It is conceivable that it should get more but we think that range is a starting point,” Macauley said.
City of Commerce, California-based 99-Cents Only Stores did not reply to an email seeking comment. The company, which offers low-priced items such as stationery, party supplies, food and eyewear, could see other buyout offers as well, the New York Post‘s sources said.
On the education front, Renaissance Learning Inc., which makes software for schools, said it got an unsolicited bid from Plato Learning Inc. worth $15.50 a share in cash, topping a bid by private equity firm Permira the week before.
The $15.50 a share offer price is 7 percent more than Renaissance Learning’s closing price on the day before the bid was made and 4 percent above Permira’s $14.85 a share offer for the company.
Renaissance said it believes Plato’s proposal could be expected to lead to a “superior proposal” under the terms of the agreement with Permira, but it continues to recommend shareholders vote for Permira’s $440 million offer for the company.
The company also said it got a letter from Permira’s counsel asserting that Plato’s bid is not a proposal that could be determined to lead to a “superior proposal.”
At the time of the Permira deal, chairman Terrance Paul said, “This transaction enables Renaissance Learning to expand its impact in education in the U.S. and abroad.”
(Jessica Hall is a correspondent for Reuters in New York; additional reporting by Anna Ringstrom, Nivedita Bhattacharjee and Abhishek Takle.)