Goldman Sachs, the investment bank that is part of the Laragrove acquisition vehicle seeking to acquire UK department store Debenhams, has said it will not back a higher offer proposed by its consortium partners, The Blackstone Group and Permira.
Laragrove is currently in negotiations to decide whether to trump the 455 pence per share offer put forward by Baroness Retail, the rival bidding group led by CVC Capital Partners and buyout group Texas Pacific Group, which values the business at £1.66bn. The Laragrove consortium initially proposed a recommended offer of 425 pence per share in July, valuing the business at £1.54bn.
The Times newspaper reports that Goldman Sachs is concerned that an offer in excess of 455 pence per share could overvalue the business. The bank’s private equity unit was expected to provide around £120m of the equity tranche of the transaction, the paper said. Despite expressing concerns about a higher offer, Goldman Sachs may opt to back the offer in a smaller role.
Yesterday Debenhams shares closed four pence lower at 471½p.
Laragrove has until Friday October 31 to raise its offer or withdraw from the auction. If it does raise its bid, the UK Takeover Panel has said it will then run the process as an open auction.
Speculation now centres on how the Laragrove consortium will make up the financing gap, if it chooses to proceed with an improved offer. Reuters reports that Permira and Blackstone are likely to make up the additional financing themselves, whilst The Times speculates on which firms might be in a position to back the deal. Duke Street Capital Apax Partners, HgCapital, PPM Ventures, Bridgepoint, Barclays Private Equity and Legal & General have all ruled themselves out of backing the bid, the UK newspaper reports.
The Laragrove consortium also includes Royal Bank of Scotland, UBS, Citigroup Global Markets and Barclays Capital, which are arranging the financing for the transaction.