Apollo Management and CVC Capital Partners have reached agreement with the board of Brit Insurance to take the London-listed business private for up to £888 million (€1 billion; $1.4 billion).
The offer comprises a cash payment of £10.45 per share, plus a 30 pence per share dividend already due to Brit shareholders, and a conditional “contingent value payment” of up to 25 pence, pending a valuation of the business in December.
Brit: The sponsor of Surrey County Cricket has been caught for £888 by private equity firms
The full price of £11 per share represents a premium of 51 percent to the closing price on 10 June, the last day of trading before Brit told the market that an unsolicited approach had been received, the firm said in a statement. Apollo first approached the insurance company alone with a cash offer of £10 per share, which – said the firm’s board – “significantly undervalued” the group.
Some analysts feel the number of public-to-private transactions, in which financial sponsors de-list businesses from the public markets, is due for an increase.
Private equity firms, which are in many cases under pressure to invest their committed capital, are now well placed to make offers for public companies, said Gareth Taylor, a private equity-focused banker at Investec. Institutional shareholders may be amenable in the current environment to entertain offers, especially if they fear a “double dip” recession in the short term.
“A private equity firm can take a longer term view and may be able to say ‘this is a business that will be performing better in three to four years time',” said Taylor.
Investec is advising European private equity firm Cinven on its £251 million take-private of Spice, a London-listed utilities services company, which reached agreement earlier this month.
Other notable take-privates this year include the €889 million take-private of Skillsoft by Bain Capital, Advent International and Berkshire Partners, in Ireland and the €571 million acquisition of Constantia by One Equity Partners in Austria.