Apollo, Centerbridge battle continues

CEVA Logistics, an Apollo portfolio company, has offered $1.8 billion in cash for transport and logistics firm EGL. The offer, Apollo’s fourth, is a 13.2 percent premium over an agreed Centerbridge-backed bid that Apollo is trying to block with litigation.

Apollo Management’s fight for transport and logistics firm EGL continues with a sweetened, fourth bid for the Houston-based firm via its portfolio company CEVA Logistics. CEVA, a global logistics and supply chain management company, is offering $1.8 billion in cash (€1.3 billion), or $43 per share, for EGL.

The offer is $5 more than an existing leveraged buyout approved by EGL’s board 19 March. The agreed bid – led by EGL’s largest shareholder, chief executive and chairman, James Crane, and backed by Centerbridge Capital Partners and The Woodbridge Company – had been increased to $38 per share from the Crane-led group’s $36 per share offer in February. Crane’s deal has a $30 million break-up fee attached.

Apollo cried foul over the board’s approval of the offer, and fired off a letter to EGL’s board and advisors saying it had been shut out of a bidding process fixed to favour the CEO’s consortium. Apollo had already offered $38 per share and then $40 per share prior to the board’s approval of the Crane-led bid, yet EGL’s board opted to “accept a deficient price to the detriment of your shareholders”, it said.

At the end of March, Apollo raised its bid to $41 per share and simultaneously sued EGL, Crane and other EGL executives in an attempt to stop the sale. Apollo said such proceedings were “unprecedented in the almost 20-year history of our firm”, in a letter to EGL’s special committee reviewing its sale.

The lawsuit Apollo filed in Harris County, Texas alleges the Crane-led merger agreement “was the product of a sham process, controlled and manipulated by Crane, with the tacit or express connivance of the remaining defendants, in order to allow Crane to reap significant financial benefit from a coerced, self-dealing transaction”.

Apollo also said it had been denied necessary access to company records and called the deal’s 2 percent break-up fee an “unconscionable” attempt to “lock-up” the transaction. It has said it will not pay the termination fee if it wins the buyout battle for EGL.

Crane, who founded EGL in 1984, in turn released a statement saying Apollo wasn’t prepared to actually sign an agreement prior to the acceptance of his group’s bid and denied allegations that the New York-based firm hadn’t been given access to EGL management nor the opportunity to perform due diligence.

“The picture that they’ve painted that we’re unresponsive is just inaccurate,” Crane told the Houston Chronicle 28 March. He called Apollo’s various claims “pretty bogus”.

EGL’s special committee reviewing the bids acknowledged receipt of Apollo’s newest offer, and said it would consider it but will not guarantee to find it to be a superior proposal to the Crane group’s bid.

Should it accept the offer, Apollo expects the transaction – which it says is “fully financed from leading financial institutions” – to close this summer. Apollo wants to combine EGL’s operations with CEVA’s, and would retain EGL’s Houston headquarters.

Apollo recently won a bidding war for UK real estate firm Countrywide, which it will acquire in a £1.1 billion transaction. After receiving a last minute competing bid – the second such eleventh hour, third party offer in the Countrywide saga – the US firm increased the deal’s stub equity to £152.5 million from £137.5 million. It had already upped its initial offer, which valued the company at roughly £5.90 per share, to a bid valuing the property company at around £6.17 per share.

Founded in 1990, Apollo is currently investing its sixth fund, which closed on $12 billion last year.