Apollo abandons the bidding war for Applus and leaves the path open to a takeover bid from I Squared and TDR.

Apollo Global Management refused to continue fighting in the war of bids for public acquisitions (takeover bids) for Applus and gives freedom of action to the consortium formed I’m squared and TDR take control of the company 1.650 million euros.

ANDThe American venture fund made this decision after National Securities Market Commission (CNMV) confirmed its decision to ban goose hunting funds such as Samson Rock and Mavenamong other things, buy shares of a Spanish company on the stock market in order to sell them to Apollo.

The regulator’s decision, which has so far been precautionary in nature, does not allow the bidder who presented the takeover to win the takeover war. cheapest offerin this case Apollo, an unprecedented situation that could have occurred as a result of certain clauses included in the contracts signed between the fund founded Leon Black and different hedge fund to buy 22% of the Spanish group ITVs in January last year.

The CNMV initially claimed that there could be concert between these investors and Apollotherefore, by law, they cannot purchase Applus securities at a price higher than the takeover offer formulated by that offeror at a price of 12.51 euros per share.

Apollo already bought 22% Plus To hedge funds in January last year, and if they continued to buy shares of companies on the stock market now, they could turn the takeover war in their favor by promoting the New York fund reach 50% capitaldespite the fact that its competitor (consortium I’m squared and TDR) offers higher price of 12.78 euros per share.

Given the fears of such an outcome and the unusual activity of these funds in the stock market after the final offers were known last time April 26buying even above 12.78 euros, CNMV preferred put an end to to this operation.

Apollo defends it there is no concertthat the regulator itself allowed and was able to study contracts with hedge fund for purchase 22% Plus and that there are no legal grounds preventing these funds from operating freely on the stock market. However, it respects the CNMV criteria and is keen to avoid direct confrontation with Spanish regulators, so it withdrew its proposal, which had virtually no chance of success after the ban, since it is logical that most investors (with the exception of goose hunters) choose the best offer.

In his statement, Apollo says that although this relationship with hedge funds “This is not contrary to Spanish takeover rules,” he prefers to refuse in order to “comply with the regulator’s criteria” and “facilitate orderly work Spanish stock market. In addition, this offeror agrees not to purchase shares or accept securities from other investors.

Following this resignation, the CNMV states that “it has no no action or investigation about Apollo regarding possible inappropriate behavior,” and lifts precautions “which imposed restrictions on transactions with Applus shares.”

Green light

Parallel to CNMV approved the proposal revised to 12.78 euros from I Squared and TDR, subject to receipt 50.01% of Applus capital. Market sources say Apollo’s initial intention is to retain its 22% stake, although it is foreseeable that a takeover bid will go through if remaining shareholders transfer their shares.

To obtain approval from the CNMV, the consortium increased the amount of bank guarantees it provided as security under the previous proposal, adding others 229 million from Barclays and Morgan Stanley, to cover the required 1,650 million.

To finance a takeover bid and take over almost debt 900 million Applus, I Squared and TDR funds undertake to contribute up to 1.233 million eurosand they also have loans from 7 banks in up to 1.520 million euros.

In any case, the CNMV’s decision could trigger litigation. legal resources. Sources close to hedge fundwho won their position in the capital of Applus during a bidding war in anticipation of price increases, believe that there is no point in talking about an agreement with Apollo on the 22% purchase and sale agreements, and note that the decision of the supervisory authority attacks freedom of the marketwhich would allow them to buy shares at the price they want and sell them to whomever they prefer.

“Takeover law does not state that whoever makes the best final offer in a takeover war must win. and does not force investors to accept it“, commented EXPANSIÓN from those around these companies in early May.

An option for using funds may be filing a controversial administrative appeal before National audience claim compensation for alleged economic damage as a result of the CNMV decision. According to their contracts with Apollo, to which they sold 22% at 10.65 euros per shareif this fund were to win the battle for Applus, it would be compensated for the entire price difference compared to the current offer of 12.51 euros.

But if they win I’m squared and TDR, and Apollo did not sell his 22%, they would not receive anything. If this investor sells this participation within a year, he will receive 75% bonus between the amount received and the 12.78 euros of the final takeover offer.