Amber prepares ‘lightning’ takeover bid for Applus to deactivate Apollo

Amber EquityCojoint venture between venture capital managers I’m squared and TDRforesees today to settle the proposed public acquisition (takeover bid) of Applus, which will include the payment of US$1.160 million. euros for 70.65% of the capital, whichaccepted your offer to purchase.

However, after the deal is concluded, the Spanish company ITV and industrial certification will receive strange shareholder With Amber as a partner with a clear majority stake, but with Apollo Global Management invested with the 21.85% it bought. In January last year, he was forced to gain control as part of a dispute. There is also another 7.5% are in minority hands.

At the moment, the share continues to move on the stock market and is trading at 13 euros, higher than the 12.78 euros that the consortium offered in its takeover offer.

Sources close to the process confirm that the fund I’m squaredbased in Miami, and British TDR Capital wants to put an end to this situation quickly and is going ahead with a “lightning” takeover bid to take Applus off the stock market and try to force Apollo to divest from its shareholding.

To this end, its purpose is convene an extraordinary meeting of shareholderswhich could take place in July to allow this exit route from the sales areain which Applus has been located since 2014, the year when its then owner Carlisle made an offer to sell shares.

More than 50% of the board of directors is required to approve an exception. therefore Apollo would not have a blocking minority. Subsequently I Squared and TDR will seek permission from the CNMV for a takeover bidwhich will cost the same price of 12.78 euros as the recent offer. The purchase of 29.35% will require a payment of 484 million euros.

If everything goes well, The operation may be completed in October or November.

As explained in the brochure of Amber’s recently completed takeover bid, “if the offeror does not obtain 75% of the voting rights of Applus on the day of settlement of the offer (i.e. today), then it will contribute to the exclusion from trading of Applus shares on the Spanish stock exchanges through exclusion proposal subsequent ones in accordance with the provisions of Article 65 of the Securities Market Law, the price of which must comply with the provisions of Sections 5 and 6 of Article 10 of Royal Decree 1066/2007, provided that the price at which said exclusion offer is to be made shall not exceed the offer price.”

Without allowing time to pass, the consortium This also rules out the possibility that the CNMV will consider that the “fair” price for Applus could be higher than €12.78.

This operation can present people with a difficult dilemma. Apollo Global Management, than last month It withdrew its takeover bid for Applus, offering €12.51, below its rival’s price.

If the New York fund accepts the takeover offer with its 22% and takes 12.78 euros per share, You must distribute 75% of the capital gain to the funds from which you purchased your current exposure in January. 10.65 euros per title. Among these investors Samson Rock, Millennium Partners, Boldhaven Investments, Maven and GLG.

Apollo’s other alternative is to wait more than a year for a sale.because in this case could save all the difference compared to 10.65 euros, without compensating for almost any of hedge funds. But because of Amber’s carve-out proposal, her competitor risks being trapped in a stake.

According to Spanish law, once a proposal to exclude a takeover approved by the assembly has been implemented, A stock market contract can be terminated regardless of the percentage of minority shareholders participating in the final offer.. In this scenario, Amber will provide shareholders with a final opportunity with a standing order to purchase the securities remaining in capital stock before proceeding with the elimination.

For a venture capital firm like Apollo, it doesn’t make sense to keep 22% in an illiquid company.Although from this perspective, it could prevent Applus from merging with Amber EquityCo.the vehicle that carries out the takeover bid.

This integration of the offering company and the acquiring company is key in a venture capital purchase because it allowsintegrate the debt received during the acquisition with the business of the company whose income allows it to pay off these obligations.

Applus closed at €12.98 yesterday. The price therefore remains above Amber’s recent takeover bid and the price of the expected carve-out bid. Market sources They associate this with purchasing funds who sold the borrowed shares and now must return them. Apollo may purchase more shares starting today once the offer from I Squared and TDR Capital is settled.