▷ Emergency solution, comment on the takeover battle for Zooplus by Stefan Kroneck


25.10.2021 – 20:25

Stock exchanges newspaper

Frankfurt (ots)

If you can’t defeat your enemy, team up with them! True to this motto, rivals Hellman & Friedman (H&F) and EQT enter into an alliance of convenience in the takeover battle for Zooplus, which is like an emergency solution. Because the financial investors got into a stalemate in the week-long bidding contest for the online pet supplies retailer, into which they themselves maneuvered with overflowing counter-offers.

When both bidders were the same with their offer prices, they exposed themselves to the risk of not receiving anything despite the effort. Because with the same high offers, the shareholders will find it difficult to decide to whom to tender their shares. For the Californian private equity company and the Swedish competitor, the hurdle of a minimum acceptance rate of 50 percent plus one share became almost unattainable under these circumstances. Without a compromise, neither of them would have got out of their predicament.

The approach taken by financial investors in the Zooplus case is unusual. Investment companies sometimes join forces to form a consortium of bidders before a public offer is made in order to reduce the risk of long-lasting battles over the property. In the case of Zooplus this was not done. Obviously, those involved assessed their chances as good enough to be able to outbid others. That turned out to be an erroneous assumption. If H&F and EQT had come to an agreement earlier, the bidding war would not have been so expensive for them.

As a laughing third party, the shareholders can now look forward to a substantial profit. Anyone who bought the Zooplus title on the stock exchange at the beginning of this year has almost tripled their stake.

If H&F and EQT should come together within the acceptance period, they can at least share the economic risk in the new constellation as Zooplus owners. Because the 3.7 billion euros with which they value Zooplus are equivalent to a moon price. The total is almost 60 times the annual operating result. Both houses need a lot of patience so that the effort pays off. Under the pressure to invest, H&F and EQT were greedy to access Zooplus. With its digitized business model, the company offers the opportunity to play at the forefront of the industry internationally in the event of further expansion. Financial investors may hope that “the winner takes it all”. Until then, however, they still have to inject a lot of money into investments in growth.

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