Techem rejects Macquarie

Techem’s executive board has made an announcement detailing the reason behind its recommendation to shareholders not accept a hostile €1.1bn takeover bid by a subsidiary of Macquarie Bank.

The board of the listed German provider of meter reading and billing services relating to energy and water consumption said the offer was inadequate from a financial point of view. Moreover, Techem argued that it could not, “identify which resources and expertise Macquarie could make available to strengthen Techem”.

The finding will strengthen the case of the buyout firm BC Partners, which tabled a rival €1.3bn public tender offer earlier in November that was welcomed by Techem’s board. BC Partners’ offer price amounts to €52 per Techem share in cash, 18.2% higher than the Macquarie offer of €44 per share. The announced price of €52 also represents a premium of 40.5% on the volume weighted three month-average stock exchange price before 23 October 2006 (€37), which is the date when Macquarie’s bid vehicle MEIF II Energie Beteiligungen announced its voluntary public tender offer.

Also Techem’s board has known BC Partners for a long time: In 1996, BC Partners acquired a controlling stake in Techem from its family shareholders. BC Partners’ investment manager Stefan Zuschke continued to be on Techem’s supervisory board until August 2006. That is long after BC Partners had exited its investment in the course of an initial public offering and a secondary offering of Techem shares in 2001.

The latest offer is subject to the condition that a minimum acceptance level of 50.1% of all shares issued by Techem will be achieved.

In a framework agreement entered into with Techem BC Partners has agreed to far reaching covenants including the support for the existing strategy of Techem, the company’s corporate domicile and jobs.

BC Partners also wishes to hold on to Techem’s management, which appointed Merrill Lynch to defend it against the Macquarie bid