AIMCo pulls plug on Candover buyout

The London-listed firm must now find another suitor or risk having to wind down its activities, according to analyst Iain Scouller.

Takeover talks between Candover Investments and the Alberta Investment Management Corporation (AIMCo) were officially scrapped Friday morning. Candover shares slumped more than 10 percent this week – from 752 pence on Monday to 665 pence at press time – as news of the stalling talks leaked out.

Candover Investments is the London-listed parent company of Candover Partners. It is also a significant LP in Candover Partners’ funds. AIMCo, a Canadian investor with $69 billion of pension plan money under management, approached Candover about a possible takeover deal in late April.

Candover’s share price had been battered over the course of the financial crisis – the firm lost 90 percent of its value in the 6 months to March 2009, leaving it with a market capitalisation of less than £50 million at its low. It has since recovered to have a market capitalisation of around £145 million at press time.
The priority for Candover now is to find another suitor “or it may go down the road of being a realisation vehicle, selling the remaining assets down over a few years and returning cash to shareholders”, Iain Scouller, an analyst with Oriel Securities wrote in a note to clients on Friday morning. “Given these potential outcomes and the possible further cash inflow from any sale of Parques Reunidos, the shares are look interesting for special situations investors at these levels,” he continued.

The potential exit of Parques Reunidos, a Spanish theme park operator acquired by Candover in 2007 for €900 million, was reported in Thursday’s Financial Times. An auction process is being run is attracting bids in the region €2 billion from a number of private equity firms, the paper reported.

This week Candover also agreed the sale of Ontex, a Belgian manufacturer of diapers and sanitary products, to TPG and GS Capital Partners for €1.2 billion. After a difficult period of ownership, the deal allows Candover to recoup 70 percent of its investment in the business.