Apax loses £2.4bn bid for Smiths Medical

For the second time this month, Apax Partners has seen a major buyout offer collapse.

The Smiths Group, the UK technology and engineering firm, has rejected a £2.45 billion (€2.93 billion; $3.86 billion) all-cash bid by Apax Partners for its medical devices division.

The proposed £2.45 billion deal had been presented as a “best and final” offer from Apax, according to a statement issued by the Smiths Group on 14 January. The Smiths’ board said the offering price was simply too low to justify the continuation of talks with the suitor.

The allure of a cash infusion may have been dramatically lessened given recent developments at Smiths. Even as talks were underway with Apax, Smiths had been strategically retrenching its balance sheet. In mid-December, Smiths completed a firm-wide refinancing, which included the addition of an $800 million revolving-credit facility, secured via multiple banking groups.

The rejection marks the second time this month that Apax Partners has had a major buyout offer collapse. Earlier in January, Apax abandoned a colossal buyout bid for the Danish outsourcing company ISS. If it had gone ahead, the $8.3 billion deal would have been the largest private equity-led transaction in Europe since 2008.

A general pickup in public markets may have hurt Apax in its bid for ISS. The Danish company declined the Apax offer on the basis that opting for an IPO would provide existing shareholders with a stronger exit.

Some of ISS’s publicly traded rivals like the UK’s Compass Group have seen shares prices make substantial gains since the final quarter of 2010.  ISS is owned by Sweden’s EQT and Goldman Sachs.