Affinity and Colorado agree on revised takeover offer

Affinity Equity Partners has raised its unsolicited offer for Colorado Group which has dropped its call for shareholders reject the hostile takeover.

Affinity Equity Partners, an Asian private equity group, has won over the board of Colorado Group, a listed Australian retailer, by raising its takeover offer to A$4.70 a share in a transaction worth approximately A$432 million ($330m; €257m).

Colorado is also considering the payment of a special dividend of A$0.53 per share that will be deducted from the offer price when paid to shareholders, the clothing and shoe retailer said in a statement filed with the Australian exchange

Colorado board has “unanimously recommended that, in the absence of a higher offer, shareholders accept Affinity’s increased offer,” according to the statement.

The revised offer is A$0.02 higher than the first A$4.68 ‘friendly offer’ observers say mark the floor price the market expects from Affinity, and the low of a A$4.70 to A$5.25 range an independent expert engaged by Colorado had determined as fair.

Colorado has committed to an ‘exclusivity’ clause agreeing not to negotiate, talk or solicit competing takeover proposals.

The revision in Affinity’s offer comes four weeks after it first made the $4.50 a share offer which the Colorado board dismissed as ‘inadequate and conditional.’ Affinity has extended the revised offer to 22 September, and has said it will issue a supplementary bidder’s statement setting out the terms of the revised offer as soon as practicable.

Affinity has also waived a controversial earnings condition which gave it the option to drop the takeover if Colorado’s first-half earnings failed to reach A$14 million. 

If successful, Affinity will claim the title of conducting the first successful unsolicited private-to-public transaction in Australia. A consortium of eight private equity firms is making an unsolicited bid for Coles Myer, in a deal worth more than A$16 billion.