Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
I would think that following press rumours, the company has now received several bids from interested parties (CVC, Cinven...). It wouldn't surprise me if a couple of other large cap funds (Bain, Advent etc) throw their hat in the ring - e.g. Advent recently took a position in Hermes logistics.
The next step would be for the board to appoint an M&A advisor to consider next steps and run a process. After being burned quite badly for his failed attempt to take the company private earlier this year with Sun, Parkin will be under the microscope will probably be mindful of the need to run a proper process, but we know that he and the board are at least be open to the idea of a take private.
I think a take private makes sense here - company will likely need to invest heavily in additional capacity to expand which a PE firm can provide. The fact that Sun Capital was a potential buyer (they are a distressed / turnaround firm) suggests that there is a lot of cost reduction potential here - I would guess this is a very labour intensive business with a lot of potential for process optimization and automation.
Clipper is a great Covid hedge for PE firms in that - over the medium term - the worse the environment for bricks and mortar retailers and the more sales will shift online. The structural shifts that would have played out over 10 years have probably accelerated by 5x now with this company very well positioned to benefit.
I think we will be able to achieve £6.50 to £7.00 per share in a properly run auction where bidders have proper access to management and the company, as a result of attractive long term trends and likely substantial cost reduction potential.
Many of their traditional retail clients will probably fold (New Look is a high probability liquidation too). Carnage on high street unlikely to abate
There will be some operational disruption which will likely hit current earnings but the upside is they can probably win new contracts at better terms given medium term supply demand imbalance for their services
Don’t think much will happen to the SP short term
1-2 weeks I think
Yes £6.50 to £7.00 p/s seems like a fair price in light of growth potential and margin expansion. Structural shift within retail has massively accelerated and so this is absolutely a prime asset for PE buyers.
Business should be able to double Sales within 3-4 years - it probably needs some investment to rapidly expand capacity and increase automation which a financial buyer can probably bring to the table. They will also have scope to increase margins by cutting some discretionary spending which should feed into the bid price. e.g. cutting the vanity project funding of Leeds Football Club (zero ROI for a B2B logistics business)
Steve Parkin seems to be an incredibly roguish character - despite being Exec Chairman (!) he tried to buy this business for £3.00 p/s last year with Sun Capital (a 'deep value' PE shop) but the board rightfully rejected the bid - we need to make sure he is not trying to pull his usual tricks again and we are getting a decent offer this time.
The above should read 8 to 8.5x
What do you think is delaying a formal bid? You would think DD must be over for Warburg / Towerbrook since they have spent 10 weeks with full access to management and the company and the AA is a relatively straight forward business to understand.
Based on where AA Ireland traded (c11x EBITDA) would basically stealing this company from the public markets at c.8.0-8.5x. I guess they might be trying to extract some irrevocable commitments from the big shareholders (Davidson Kempner, Cleveland Square etc). I'm sure they would hate to table a bid and have e.g. Apollo counterbid (not unlikely) and so these large shareholders could be arguing for a substantial premium in exchange for giving up their rights to accept higher offers.
Quite possible this negotiation would be going to go down to the wire until the end of the month when the PUSU expires
Guys any idea about this takeover filing from Aon? 38.5a Irish Takeover Code uploaded at 11.09... CS is the exempt principal trader.
Do you think Aon is looking to table a bid?
Seems that one of the bidders (CVC or Cinven) are looking to bid £5.50-per-share according to Daily Mail.
I think this could easily for £6.50-7.00 if we have a proper auction. Steve Parkin clearly open to a takeover given that he teamed up with Sun Capital back in Dec-19.