Private equity groups Hellman & Friedman and EQT have ended a bidding war for pet food retailer Zooplus with a joint offer that values its equity at €3.7bn, in the latest example of the industry paying a huge premium to buy a listed business.
The pair made a final offer of €480 a share, 85 per cent above a three-month trading benchmark before the bidding war started, Zooplus said on Monday.
Buyout groups are paying the highest premiums in more than two decades, with an average of 45 per cent for European companies in 2021, according to data from Refinitiv, after raising record-sized funds and amid fierce competition for deals.
The premium being paid for the company is “remarkable”, Zooplus’ chief executive Cornelius Patt said in a statement.
“It has been the management’s top priority throughout the entire process to act in the best interest of the company and maximize the value for our shareholders while providing transaction certainty,” he said.
Hellman & Friedman began the battle for control of the petcare company with a €390 a share offer in August. The offer was raised to €460 in September after Zooplus said it was also in talks with KKR and EQT about possible bids. EQT, which already owns the veterinary surgery roll-up IVC Evidensia, bid €470 in September and Hellman & Friedman agreed to match it this month.
Under the deal, which has the support of Zooplus management and its supervisory board, EQT will join Hellman & Friedman’s bidding vehicle with equal governance rights. The deal needs approval from more than 50 per cent of Zooplus shareholders.
“With this step we have found a solution to resolve the current deadlock in the tender process and enable the continued pursuit of the investment,” Hellman & Friedman partner Stefan Goetz and EQT partner Johannes Reichel said in a joint statement.
It is a relatively rare example of rival private equity bidders joining up to strike a deal. In February, Blackstone and Global Infrastructure Partners made a similar move, ending a takeover battle for the UK-listed private jet services company Signature Aviation with a joint £3.5bn bid.
Zooplus, one of Europe’s largest online petcare retailers, has benefited from a rise in pet ownership during the pandemic. Its sales rose 18 per cent last year and its shares have surged more than 400 per cent since late February 2020.
Spending on petcare rose 8.7 per cent globally in 2020, according to Euromonitor International.
In another recent example of the large premiums being paid by private equity, US group Clayton, Dubilier & Rice this month agreed to buy the UK supermarket Wm Morrison at a 61 per cent premium to the share price before a bidding war began.