Duke Street Capital has increased its stake in UK dental company Oasis Healthcare to 34 percent, and upped its bid to £88.2 million, as it looks to fend off a competing bid from trade rival ADP.
The shares were bought from UK venture capital firm Foresight Venture Partners, asset management firm Chelverton, private equity firm Beringea and Icelandic bank Kaupthing this morning.
The buyout firm has also raised its bid for Oasis to £88.2 million (€130.5 million, $177.4 million). The revised 94 pence a share bid trumps trade rival ADP’s £85 million bid.
Duke Street originally offered 82 pence a share for Oasis in June. Chairman Ron Trenter and the Oasis board accepted this bid, only to see it outstripped by ADP’s £85 million (or 91 pence a share) counter-offer last week.
The stake-building approach mirrors that employed by Permira in its current pursuit of Valentino Fashion Group. After making an offer in June that valued Valentino at €2.6 billion, Permira has since increased its stake several times through private share purchases, and now owns 60.2 percent of the Italian fashion brand.
Duke Street’s persistence demonstrates its appetite for a sector that has proved highly lucrative for private equity firms. New York-based FdG Associates made an eight times return on its $12 million investment when it sold DentaQuest in February, while London-based Risk Capital Partners made a return of more than ten times its original investment when it sold Integrated Dental Holdings in April 2006.
Duke Street has been dragged firmly into the middle of the current controversy surrounding private equity in the UK. It was publicly criticised by Labour MP Angela Eagle over job losses at biscuit-maker Burton’s, resulting in managing partner Peter Taylor being called before the UK Parliament’s Treasury Select Committee this week, and has also been lambasted over creditor losses at DIY chain Focus.