Dusseldorf The financial investors Hellman & Friedman (H&F) and EQT have achieved their first important goal with the takeover of the online retailer Zooplus. As they announced, they were able to secure more than 50 percent of the shares.
Until recently, it was not certain whether the offer would be successful. Although the price offered was more than 80 percent above the volume-weighted three-month average price of Zooplus shares before the first takeover offer, investors were only able to secure a good 30 percent of the shares up to one day before the end of the acceptance period.
The exact result of what percentage of the shares has already been offered to the investors is expected to be announced on November 8th. The offer was linked to an acceptance rate of 50 percent plus one share. The acceptance period ended on the night of November 4th.
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H&F and EQT plan to take Zooplus off the stock exchange in the medium term. To achieve this, they have taken the first important step by taking over the majority. Shareholders who have not yet tendered their shares now have the option of accepting the offer of 480 euros per share in a further acceptance period. This period is expected to run from November 9th to November 22nd.
Zooplus reduces the earnings forecast
While the shareholders benefit, the success of the offer entails additional costs for Zooplus: As the company announced, it will incur one-time transaction costs in the double-digit million range in the 2021 financial year as a result of the probable completion of the takeover offer.
The Management Board is therefore reducing its earnings forecast and currently expects an Ebitda for the full financial year 2021 in the range of 20 to 35 million euros. Previously, he had forecast an Ebitda in a range of 40 to 80 million euros. The sales forecast for the full financial year 2021 remains in the range of 2.04 billion to 2.14 billion euros.
In mid-August, Zorro Bidco, a holding company controlled by funds advised by Hellman & Friedman, announced its intention to make a voluntary public takeover bid for Zooplus. At the beginning of October, the offer from Pet Bidco, a holding company indirectly held by EQT Private Equity, was exceeded, then H&F drew level a day later.
Now both financial investors are going through the takeover together, which rarely happens in the investor industry when they have previously competed. The last known case was a takeover battle for the heating reading service Techem at the beginning of 2007. The two investors at the time, the Australian bank Macquarie and the financial investor BC Partners, initially competed and then allied.
What ultimately convinced many Zooplus shareholders: The current bid is far beyond what analysts previously believed Zooplus had as potential. In mid-May, Barclays announced a target price of 185 euros.
The pet supplies market is growing rapidly
Analyst Christian Salis from Hauck & Aufhäuser originally named 225 euros as a target price and accordingly already described H & F’s first offer of 390 euros as attractive – and recommended it to be accepted. But then the price continued to rise.
All experts agree that Zooplus still has great potential. “In the long term, it is quite realistic that the online share in retailing pet supplies will increase from around 15 percent today to up to 50 percent,” predicted Volker Bosse, trade and consumer goods expert at Baader Bank.
The pet supplies market is growing by six to seven percent each year, driven primarily by online sales. From EQT’s point of view, Zooplus is well positioned for this. The company has expanded in Europe and has a leading position in the respective markets, it is said.
Both investors had indicated in their offers that they would be willing to invest further funds in Zooplus even after the purchase in order to utilize this growth potential. “In the short term this will entail a lot of investments”, it is said in the bidding circles. A lot of work still needs to be done to bring Zooplus to higher growth rates.
For this reason, too, H&F and EQT could not afford another bidding with an even higher purchase price. Once the acceptance threshold for their joint offer has been reached, they now have the opportunity to increase their share further.
More: Surprising turnaround in the takeover battle for Zooplus: Hellman & Friedman allies with rivals EQT