The strengths and weaknesses of a joint takeover bid by PE firms

Our Corporate & Commercial team speaks to Real Business and reviews the strengths and weaknesses of a joint takeover bid and what legal consideration and arrangements should be considered.

Shawbrook Group received a revised takeover bid of £868m from Marlin Bidco, a company owned by private equity firms BC Partners and Pollen Street Capital Limited. This joint takeover bid was “final and not to be increased”.

Shawbrook’s directors have since stated the offer undervalues the company and have advised shareholders to take no further action. But whilst the takeover appears to have come to a standstill, the bidding process used by Marlin Bidco has highlighted the increasing global trend for companies to receive a joint takeover bid from from private equity firms, rather than fighting against each other for the prize.

Says, “In terms of strengths, the joint bidding structure clearly spreads the risk of the takeover between the private equity firms, potentially making it an easier “sell” to respective shareholders. It also gives private equity firms access to a larger pool of capital and an opportunity to participate in larger bids.

The bidding process itself is expensive – for Marlin Bidco, costs currently stand at nearly £10m (1.04 per cent to 1.22 per cent of the deal value) – and the sharing of such substantial costs is another benefit for the private equity firms. In addition the two can pool resources and expertise together to formulate a successful bid.”

The full article is available online and was first published by Real Business on 20 June 2017: The strengths and weaknesses of a joint takeover bid by PE firms