Cinven to launch offer for Synlab shares

We’ve got a take-private-tastic lineup for you today.

First up, Cinven has said that it will move for the shares in medical diagnostic business Synlab that it does not already own – six months after its interest first became public.

Next, we have a new development in a deal we’ve followed closely since the start of the year. Triton Partners has extended its offer period for Finnish construction company Caverion as it awaits merger control clearance from the Finnish regulator. Competition concerns have of course been at the heart of that story, after rival bidder Bain Capital warned back in January that Triton’s offer could come under antitrust scrutiny.

Third in the take-private lineup we have a deal that is pretty much done and dusted – Silver Lake’s move for Software AG.

Then just before the final whistle, we sneak in some news ahead of the weekend as Dynasty Equity takes a minority stake in Liverpool Football Club.

Launch

Cinven said this morning that it will launch a public acquisition offer for Frankfurt-listed Synlab, about six months after the private equity firm’s interest first became public.

Synlab is a European clinical laboratory and medical diagnostic company based in Germany.

The offer is for €10 per share, the same as the indicative offer price set in the original expression of interest back in March, which offered a 42 percent premium to the undisturbed price on the previous trading day or 13 percent to the previous three-month average. It values the total equity at around €2.2 billion.

Synlab’s share price had jumped from €6.89 to around €9.50 after the expression of interest went public, but had fallen as low as €8.12 yesterday, suggesting traders were losing confidence the deal was going to go ahead. It was at €9.99 at time of writing this morning after the public offer was announced.

Signs for the deal look good in terms of Synlab’s leadership – its signed an investment agreement with Cinven and the management board and supervisory board said they “anticipate a good further cooperation” with the private equity firm.

The shareholder side also looks positive – Novo Holdings, Ontario Teachers’ Pension Plan Board and management board members have signed irrevocable undertakings to sell their shares. Factoring in its holding of 43 percent, Cinven has secured about 79 percent of Synlab’s share capital and about 80 percent of its voting rights, according to a statement. There will be no minimum acceptance threshold on the public offer.

Synlab only went public – at €18 per share – back in April 2021, but it is far from alone in being a recently listed company potentially moving back to private hands.

The company took a hit from reduced demand for covid testing and a price drop for covid PCR tests, as well as the inflationary cost environment, said a statement. That hit revenues and EBITDA margin, leading to a drop in the market cap “which has been exacerbated by low trading liquidity in the stock”.

As Magnus Tornling, EQT’s global head of equity capital markets, told me in a feature this week on why so many recently listed companies are drawing private equity interest, in 2021 “the number of IPOs that came to market was probably too many. That softened it a bit, then naturally you go back to the cases that you know very well, that you have tracked for a long period of time, where there is still good liquidity.

“That has been the key issue in Europe – the liquidity in the newly issued companies has dried up.”

Cinven was in fact behind Synlab’s IPO. Cinven had acquired Synlab and French medical diagnostics provider Labco for a combined enterprise value of €2.9 billion in 2015. After merging the firms and growing the company organically and via more than 100 add-ons, Cinven and co-investors Novo Holdings and Ontario Teachers’ Pension Plan Board listed it on the Frankfurt Stock Exchange in April 2021.

The same investors being involved in listing and then delisting is also a common theme, Daniel Simons, partner in law firm Hogan Lovells’ corporate practice, told me for the take-private feature.

“If you have sellers that have either had to keep a large residual stake post IPO and/or have been locked up for a significant period post-IPO, then once that lockup period expires – if they are still a willing seller – they will be supportive of incoming offers for the company, even though it’s just listed,” he said.

You can read that whole feature here.

Macquarie Capital and Deutsche Bank are lead financial advisors on Cinven’s public offer, with Barclays, Citi and Goldman Sachs as additional financial advisors. Kirkland & Ellis and Clifford Chance are legal advisors for Cinven.

Financing is underwritten by physical bookrunners Barclays, BNP Paribas, Citi, Crédit Agricole, Deutsche Bank, Mizuho and Natixis; plus bookrunners Goldman Sachs, HSBC, ING, Raiffeisen Bank, Santander, Standard Chartered, SMBC and UniCredit.

Direct lending comes from Apollo, CVC Credit, MV Credit and Rantum Capital.

Extension

Sticking with take-privates, Triton Partners has extended its offer period for Finnish construction company Caverion to 1 November, as it still needs one last regulator to provide merger control clearance – that of the Finnish Competition and Consumer Authority (FCCA).

The FCCA has said that the remaining substantive questions “concern a very narrow geographical area in Finland”.

Triton’s Mikael Aro said in a statement that the firm expects to be able to complete the tender offer in November and that the “process thus far has confirmed our earlier assessment that there should be no material substantive issues in obtaining the remaining clearance”.

Now this one is particularly interesting, as readers will remember that Bain Capital had also attempted to take Caverion private, and had raised its own merger concerns about Triton’s bid.

You can read the full story on that in our coverage from back in January.

Completion

Another take-private offer has jumped that hurdle though. Silver Lake has completed public tender offer for German tech company Software AG.

The private equity firm has secured 85.1 percent of the share capital and voting rights in Software AG, after obtaining the last outstanding merger control clearance on 15 September.

You can read more on that deal, including rival interest from Bain Capital portfolio company Rocket Software, in our previous coverage here.

And now the sport

To round off, here’s a nice deal to report in time for the weekend.

Dynasty Equity has acquired a minority stake in Liverpool Football Club from Fenway Sports Group.

The minority investment will be used to pay bank debt incurred during the covid pandemic and capital expenses made to enhance Liverpool’s stadium Anfield, build AXA Training Centre, repurchase Melwood training ground and player acquisitions during the summer transfer window, according to a release.