Buyout barons make bloody return in Europe

Software AG

03/05/2023 11:03

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Pamela Barbaglia
       LONDON, May 3 (Reuters Breakingviews) - Silver Lake and
Bain are facing off to buy German company Software AG amid a
revival in takeovers. Cheap stock prices mean deals can
work despite debt constraints. But a limited pool of targets
will make it hard to deploy $2 trln of dry powder, and stay
disciplined.
    Full view will be published shortly.
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    CONTEXT NEWS
    Buyout groups submitted offers for five European listed
companies in April, totalling over 12 billion euros, according
to Breakingviews calculations.    
    U.S. private equity firm Silver Lake said in a regulatory
filing on April 28 that it had acquired a 5% stake in Software
AG, days after announcing a 2.2 billion euro tender offer for
the German business software developer. Bain Capital has
also built a stake in Software AG, raising the prospect of a
takeover battle as it seeks to combine the German enterprise
software maker with its own portfolio company Rocket Software.  
    Canada’s Brookfield Asset Management made a 2.13 billion
pound bid on April 21 to buy London-listed payments provider
Network International, topping a rival proposal from CVC Capital
and Francisco Partners. Brookfield valued the company at 400
pence per share, while CVC and Francisco Partners had previously
submitted a 387-pence-per-share joint proposal.   
    British oilfield services and engineering firm John Wood
Group said on April 17 that it would engage in takeover
talks with Apollo Global Management after the U.S. buyout fund
made an improved 1.66 billion pound bid on April 4. The offer
values John Wood Group at 240 pence per share and involves a 17%
premium to the company’s closing share price on April 3.
    London-listed online retail firm THG said on April 17 that
it had received a “highly preliminary” buyout proposal from
Apollo Global Management, without disclosing terms of the plan.
Apollo must announce a firm intention to make an offer by May 15
or walk away.   
    London-listed veterinary pharmaceuticals maker Dechra said
on April 13 that it had entered takeover discussions with
private equity group EQT over a possible 4.63 billion pound
buyout deal. EQT’s offer values Dechra at 4,070 pence per share
and represents a 46.6% premium to the company’s closing price on
April 13.   
    Private equity managers have an estimated $1.93 trillion of
unspent capital to invest as of May 2023, according to data
provider Preqin.

 (Editing by Neil Unmack and Oliver Taslic)
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