Bidders on hunt for possible takeover targets!

Bidders on hunt for possible takeover targets!

Last week saw an influx of takeover activity as three possible offers were announced. This brings the total number of possible offers announced since 1 January 2021 to 18 possible offers in relation to 17 targets. There have also been a total of 13 firm offers announced since the beginning of the year. Deal activity has already exceeded that of H1 2020, where uncertainty relating to the pandemic resulted in an unusually quiet period, with only nine firm offers announced and ten possible offers in relation to nine targets.

One of the three recently announced possible offers was a £1.2bn cash offer for FTSE 250 real estate developers St. Modwen Properties by US private equity investors, Blackstone Group Inc., announced on 7 May 2021. The indicative offer of £5.42 per St. Modwen share represents a 21.1% premium to St. Modwen’s closing share price one day prior to the announcement. News of the announcement saw St.Modwen’s share price jump 20% on the date of the announcement.

The board of St. Modwen have indicated to Blackstone that they would be willing to unanimously recommend the current offer should a firm offer be made. The possible offer is subject to numerous pre-conditions, including due diligence, which is currently underway. Despite the board’s willingness to engage with the offer, one of its biggest shareholders, J O Hambro Capital Management, who holds just over 6% of St. Modwen’s share capital as of 10 May, have already indicated that they feel the offer is too low.

St. Modwen’s reported strong operational performances in 2020 despite the pandemic, which it credited to its focus on logistics and housebuilding, two sectors which demonstrate long-term growth trends. The pandemic and Brexit have seen demand for warehouse spaces grow, putting the FTSE 250 company in an attractive position, as it reported its income logistics portfolio has almost doubled in three years and has plans to continue to grow and develop its warehouse exposure in its yearly trading update on 9 February 2021.

Blackstone have until 4 June to confirm its intention to make a firm offer.

On 6 May 20201, a £223.3m possible offer was made for Bacanora Lithium plc by major shareholder, Ganfeng International Trading (Shanghai) Limited, who holds a 17.41% interest in the company. The offer represents a 50% premium to Bacanora’s share price as of 5 May 2021.

Ganfeng represents the world’s third largest and China’s largest lithium compounds producer and the world's largest lithium metals producer. Ganfeng is listed on both the Shenzhen and Hong Kong stock exchanges.

Ganfeng and Bacanora entered into a joint venture agreement in February 2021 for the Sonora Lithium project in Mexico. The independent directors of Bacanora and the Ganfeng board have held detailed discussions both regarding the terms of the possible offer and the possibility of Ganfeng increasing its 50% stake in the project to 100% via the acquisition of Bacanora.  The Bacanora independent directors have indicated that they would expect to recommend the offer should a firm intention be announced, describing the offer as an ‘attractive proposal’.

The final possible offer announced last week, on 6 May 2021, was an offer by US private equity group KKR & Co Inc for FTSE 250 infrastructure investment company John Laing Group plc.  John Laing directors have advised shareholders to take no further action at this time. News of the possible offer saw John Laing’s shares jump over 16% on the day of the announcement.

Both Ganfeng and KKR will have until 3 June 2021 to confirm their intentions to make a firm offer.

These latest possible offers further highlight the ongoing trend of foreign bidders that Market Tracker has noted (see our Q1 2021 Public M&A update and Foreign Companies in UK shopping spree).  Furthermore, the interest from private equity groups further emphasises the growing trend of P2P transactions, which have accounted for 67.7% of firm offers so far this year. Market Tracker will provide an update on these trends and more in its H1 2021 trend report.

 

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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.