European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Hellman & Friedman Matches EQT in Contest for Zooplus AG

EQT/​Dechra Pharmaceuticals: Recommended Offer

Event-Driven

<a href="https://www.smartkarma.com/entities/zooplus-ag" target="_blank" data-smartkarma-citation="entities:21749:1" rel="noopener">zooplus AG (ZO1 GR)</a> welcomed the €3.4 bn bid by <a href="https://www.smartkarma.com/entities/eqt-ab" target="_blank" data-smartkarma-citation="entities:28922:1" rel="noopener">EQT AB (EQT SS)</a> that trumps an improved offer by Hellman &amp; Friedman. Consideration is €470/share, in cash, an implied equity value of c. €3,360 mn (€3,600 mn as reported) and implied EV of €3,286.5 mn. The counteroffer represents 1.45x EV/Fwd Revenue, 39x EV/Fwd EBITDA and 116.3x Fwd P/E. It is a 69% premium to the unaffected share price as of 12 August, the day before H&amp;F announced its voluntary public takeover offer.
Hellman &amp; Friedman had previously hiked its offer from €390 to €460 per share (18% increase) after Zooplus confirmed Bloomberg reports that it was in talks with KKR and EQT about counteroffers.
The ongoing bidding war for zooplus AG shows that full valuations are not an obstacle for some private equity funds as they have record amounts of dry powder from investors (pension funds, insurance companies and HNW individuals).
Comparables are trading at a mean 1.35x EV/Fwd Revenue. This would imply a (generous) fair value for zooplus AG of €438.7/share. The shares are trading c. 11% above that value and offer 1.6% 22e FCF yield. Pet population is rising in Europe though and zooplus AG could keep on adding market share. The bottom line of zooplus is positive, unlike many retail e-commerce peers.
KKR withdrew after Hellman &amp; Friedman increased the prior offer price by 18%. The small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, although I do not rule out further small increases. Gross spread to EQT's offer is -3.3%. We may be already witnessing a case of winner's curse, but of course this does not rule out a further bid by Hellman &amp; Friedman. Hats off to the Board of zooplus AG.

zooplus AG (ZO1 GR) welcomed the €3.4 bn bid by EQT AB (EQT SS) that trumps an improved offer by Hellman &amp; Friedman. Consideration is €470/share, in cash, an implied equity value of c. €3,360 mn (€3,600 mn as reported) and implied EV of €3,286.5 mn. The counteroffer represents 1.45x EV/Fwd Revenue, 39x EV/Fwd EBITDA and 116.3x Fwd P/E. It is a 69% premium to the unaffected share price as of 12 August, the day before H&amp;F announced its voluntary public takeover offer.
Hellman &amp; Friedman had previously hiked its offer from €390 to €460 per share (18% increase) after Zooplus confirmed Bloomberg reports that it was in talks with KKR and EQT about counteroffers.
The ongoing bidding war for zooplus AG shows that full valuations are not an obstacle for some private equity funds as they have record amounts of dry powder from investors (pension funds, insurance companies and HNW individuals).
Comparables are trading at a mean 1.35x EV/Fwd Revenue. This would imply a (generous) fair value for zooplus AG of €438.7/share. The shares are trading c. 11% above that value and offer 1.6% 22e FCF yield. Pet population is rising in Europe though and zooplus AG could keep on adding market share. The bottom line of zooplus is positive, unlike many retail e-commerce peers.
KKR withdrew after Hellman &amp; Friedman increased the prior offer price by 18%. The small increase of EQT's counteroffer should signal that the end of the "auction" is nigh, although I do not rule out further small increases. Gross spread to EQT's offer is -3.3%. We may be already witnessing a case of winner's curse, but of course this does not rule out a further bid by Hellman &amp; Friedman. Hats off to the Board of zooplus AG.

zooplus AG

EQT Bites H&F in War for Zooplus AG