Cinven closes in on Spice take-private

The firm’s offer of £251m - its third in its pursuit of the utility services company - has been recommended by the company’s board.

Cinven has made a £251.1 million (€295 million; $398 million) offer for Spice, a London-listed support services business, which has been accepted and recommended by the company’s board. The price of 70 pence per share represents a premium of more than 40 percent to Spice’s 49.75 pence share price as of June 14, the day before Spice announced receipt of Cinven’s bid.

If successful, Cinven will seek to further grow Spice both organically – targeting expansion in the US – and via acquisitions. A source close to the firm described the proposed capital structure as “fairly conservative”, with “well over” 50 percent equity.

Spice was founded in 1996 through a management buyout from utility company Yorkshire Electricity. It provides support and maintenance services to utility companies. It was admitted to the official list of the London Stock Exchange in July 2008, having first been admitted to AIM back in August 2004.

The latest recommended offer from Cinven recommends the buyout firms third attempt, having initially offered 56 pence per share in late May. This was dismissed as “significantly undervaluing” the businesses, as was the following offer in July of up to 65 pence per share.

Cinven’s bid has received irrevocable undertakings from shareholders accounting for more than 25 percent of Spice’s issued share capital, as well as a letter of intent from a shareholder with 3.11 percent of the share capital.

In terms of the deal's size, a spokesman for the firm described it as sittging “right in our sweet spot in terms of size and as a platform for further growth”. The London-headquartered firm typically targets investments which require at least €100 million in equity capital.

It is currently investing from its fourth fund, which raised which raised €6.5 billion in 2006 and is expected to be roughly 70 percent deployed by the end of the year. Hugh Langmuir, who took over as managing partner of Cinven last year, recently told PEI that although Fund IV hasn’t made any realisations yet, book values are steadily improving and realisations are in the pipeline. Langmuir’s in-depth interview will feature in the October edition of Private Equity International.