New Zealand website business, Trade Me has accepted a slightly higher offer from European private equity giant, Apax Partners, and subject to there being no higher rival offers, will become foreign-controlled.
The price is $NZ2.56 billion after Apax upped its offer by about NZ$20 million to match an indicative offer from rival US bidder Hellman & Friedman.
Trade Me shareholders will receive $NZ6.45 for each of their shares in the online giant under the deal, which remains subject to shareholder, court and NZ Overseas Investment Office approval.
The offer represents about a 25% premium to Trade Me’s share price before Apax’s interest in the firm was disclosed.
Trade Me said that in the absence of a superior proposal, its board had unanimously recommended that shareholders accept the offer.
Hellman and Friedman can still return with a higher indicative price, but it would have to be clearly better than APAX’s price to get Trade Me interested.
If Apax wins it will be the second time Trade Me has been foreign controlled – from 2006 to 2011 it was owned by Fairfax Media.
Trade Me chairman David Kirk said: “The Apax Funds have increased their offer price since the indicative proposal, following the completion of their due diligence. After careful consideration, the Board has unanimously concluded that this offer is consistent with our efforts to deliver maximum value for shareholders.
“We’re confident Trade Me would have a successful standalone future, but we believe the certainty of the cash offer and material premium would be an attractive outcome and it merits being put to shareholders with our recommendation, in the absence of a superior proposal.”
It also contains usual termination rights for each party, including where various material adverse circumstances arise, or where a party is in material breach.
The scheme contains customary exclusivity provisions in favour of the Apax Funds, including “no shop, no talk, no due diligence” restrictions.
These restrictions are subject to exclusions which permit the Trade Me Board to engage on a competing proposal which is (or is reasonably capable of becoming) a superior proposal, subject to notifications being made to Apax and to the Apax Funds’ right to match any such proposal.
The agreement also sets out circumstances under which Trade Me may be required to pay the Apax Funds an NZ$19.2 million “break fee”.
Trade Me said it had been advised that the acquisition is expected to be funded with equity committed by the Apax Funds, and third-party debt financing.
Trade Me dominates the NZ online market for selling second-hand goods, but there is competition from the likes of Facebook, Gumtree and Fairfax-owned Neighbourly. But there are strong competitors in its key listing markets of jobs, property and cars.
