The offer price for conditional dealings was set at 260 pence per share today, towards the lower end of an indicative price range of 250 pence to 300 pence per share. The IPO gives Halfords a market valuation of £593 million (E889 million; $1.1 billion) and an enterprise value of £800 million assuming net debt of just less than £200 million. The commencement of unconditional dealing is expected to occur on 8 June.
The IPO comprised a primary offer of 53.9 million ordinary shares (worth £140 million) and a secondary offer of 48.7 million ordinary shares (worth £126.7 million). CVC said that following admission, it is expected that CVC Funds will retain 46 percent of ordinary shares, while 45 percent will be held by institutional and other investors and management will own six percent.
CVC invested £137 million of equity when it acquired Halfords in a £427 million management buyout in August 2002. Halfords, which operates around 400 stores in the UK and has annual sales of more than £500 million, will use the proceeds of the IPO to reduce debt and open more superstores and smaller shops.
“We are delighted the offer has been so well received by the market – the uptake is a reflection of Halfords’ growth prospects, market position and excellent management,” said CVC partner Jonathan Feuer, who remains a non-executive director on the Halfords board.
The sale was managed by Merrill Lynch and Citigroup, who can increase the offering by as much as 15 percent through an over-allotment option. UBS and Cazenove acted as underwriters to the IPO, while international law firm Freshfields Bruckhaus Deringer provided legal advice to Merrill and Citigroup.
The fact that the IPO was successfully accomplished may hold the UK IPO window open for a while longer. Last week, Doughty Hanson floated football clothing manufacturer Umbro at a price lower than the indicative range, and postponed indefinitely the listing of German auto parts firm ATU, which was scheduled for mid-June. The new issues market has been hit by political tension in the Middle East, record oil prices and fears of interest rate rises.
The IPO represents the fourth exit achieved by CVC this year and follows the $340 million sale of UK high voltage components manufacturer Trench Electric Holdings to Germany’s Siemens in April. CVC closed its most recent fund at $4 billion in 2001, and is expected to commence a new fundraising later this year or next year.