Wow, what a start. First up we look at some third-party investors voicing their opinions on the take-private bids by Silver Lake and Bain Capital for Software AG. Then we report on Apollo ending talks to buy engineering firm John Wood Group.
Next, Corsair Capital partner Raja Hadji-Touma tells us why wealth management and insurance firms look ripe for investment, before we finish with news of EQT buying some mobile telecoms infrastructure assets.
Battle
The take-private tussle between Silver Lake and a portfolio company of Bain Capital for German tech firm Software AG is bringing in new players with some shareholders voicing their opinions.
Silver Lake’s latest offer is for €32 per share, giving Software AG a valuation of around €2.4 billion. It is pre-funded and due diligence has been completed.
Bain’s Rocket, based in Boston, Massachusetts, last week made an offer of €34 per share, but with the caveat that if Silver Lake and Software AG Foundation – a charity and Software AG’s largest shareholder – supported the merger of Software AG and Rocket, then the offer price would rise to €36. That offer is a non-binding expression of interest.
The Software AG board said it would be sticking with Silver Lake’s offer, however, as it “is in the best interest of all of the Company’s stakeholders; it has a significant premium for shareholders, a high degree of deal certainty and will accelerate the execution of the Company’s strategy as an independent German headquartered company”. It said it was not in a position to engage with the Bain offer.
But investment manager Schroders, which is the second largest shareholder in Software AG after the Foundation, said in a statement – first reported by the Financial Times – that the offer from Silver Lake “materially undervalues the company”.
“As such, we are surprised that the Takeover Committee appears unwilling to engage with potentially higher offers from other interested parties,” it added. “It could be seen as raising potential questions regarding conflicts of interest and whether appropriate fiduciary process is being followed to equally protect the interests of minority shareholders.”
After Schroders’ statement, the Foundation got involved, saying that it “strongly believes that Silver Lake is the valuable long-term partner for Software AG” and that it only supports the Silver Lake bid.
The Foundation’s opinion matters. It holds about 30 percent of Software AG’s shares, and has agreed to sell a 25 percent stake to Silver Lake – an agreement that is not revocable. Silver Lake owns a further five percent.
Silver Lake and Software AG already had a relationship before the take-private bid. The private equity firm made a €344 million PIPE investment in the software developer in December 2021, which gave it representation on the board. Those board members recused themselves from the take-private bid and an independent takeover committee was formed.
Silver Lake intends to buy the Foundation’s 25 percent stake regardless of what happens, PE Hub Europe understands.
We asked all parties for comment but they declined to comment further to what was already in the public domain.
No go
After a flurry of take-private attempts surfaced in the last few months, some are beginning to fall by the wayside.
Apollo Global Management’s take-private pursuit of John Wood Group is over, after the US private equity firm said this morning that it did not intend to make a firm offer for the Scottish engineering firm. It is the second time Apollo has exited talks with a take-private target in as many trading days.
The Wood board had rejected four offers from Apollo, before agreeing to enter talks on 17 April after Apollo made an offer of 240p per share, which valued the company’s outstanding equity at £1.66 billion ($2.1 billion; €1.9 billion).
The decision came two days before the deadline to make a firm offer, on 17 May. Last week, Wood reported group revenues of $1.45 billion in the first quarter, a rise on the same quarter last year “reflecting good momentum across all business units and higher pass-through revenue”, according to a statement.
On Friday, another Apollo take-private target – UK online retailer THG – said that “there is no longer any merit in continuing to engage with Apollo”. Apollo confirmed in a statement that it does not intend to make a firm offer for THG.
Fragmentation
Wealth management companies and insurance brokerages in continental Europe “have all the hallmarks for a very attractive buy-and-build strategy”, Raja Hadji-Touma, a partner at private equity firm Corsair Capital, told PE Hub Europe.
Attractions include plenty of owner operators ready for succession, growing regulation, compliance and operation burdens, and a long tail of companies that are not at scale and ripe for consolidation, said Hadji-Touma.
“We’re at the right inflection point for flows to accelerate.”
They are also in a market where independents provide a better service than incumbent financial institutions, he added. “Independence is the way to go.”
Corsair is particularly interested in the DACH region, although the UK is out of play. “The US is 15 years ahead of the UK and the UK is 15 years ahead of Europe” when it comes to consolidation in the sector, said Hadji-Touma.
Read the full interview to hear why Hadji-Touma also believes cash management is ripe for investment and how the firm approaches growth in differing regulatory regimes.
Mobile
EQT, via EQT Infrastructure VI fund, has agreed to acquire a 60 percent stake in a newly created Italian mobile network company, which will own and operate Wind Tre’s mobile and fixed network infrastructure.
The transaction gives the new company an enterprise value of €3.4 billion.
The company will provide wholesale connectivity services to Wind Tre and other Italian mobile operators.
CK Hutchison, Wind Tre’s current owner, will remain invested in the company alongside EQT Infrastructure and will own a 40 percent stake in the company.
EQT will support in developing the company’s network and service offering, while pursuing additional growth opportunities in areas such as fixed wireless access, IoT and private networks, according to a release.
Telecoms companies selling their infrastructure has been a big theme of the last few years. Check out our interview with Nikos Stathopoulos, BC Partners’ chairman of Europe, for how valuations of these assets have changed over the last 12 months and about the sale of its portfolio telecoms company United Group’s towers business.
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