Apollo is guaranteed to have the firepower bank to fight the war for Applus | Companies

Now Apollo has everything to take over Applus. Once CNMV approval for its proposal was received, the fund guaranteed itself the firepower to enter the fray. He signed a loan of 1.300 million euros with the bank and, in addition, a commitment from the fund’s parent company to contribute up to 1.226 million euros. This would mean Apollo has the ability to raise Applus’ valuation to $1.6 billion.

Apollo is offering Applus shareholders €9.5 per share. This values ​​ITV at €1.226 million. I Squared and TDR, for their part, offer 9.75 euros and value the company at 1.258 million. According to what was stated in the prospectus, the American fund has the ability to do this. He signed a macro loan of 1,300 million euros with the bank, with the help of which he intends to refinance the current debt of 885 million and pay off part of the money that the takeover cost him.

Apollo has signed a financing agreement with eight investment banks: Santander, BNP Paribas, Unicredit, Mizuho, ​​Natixis, SMBC, Sabadell and Société Générale. To initially carry out the acquisition, they took out a bridge loan for this amount with a repayment period of 60 days. These banks have an obligation to refinance this debt into a new seven-year loan.

The debt is conditional on Apollo contributing at least 40% of the money raised from the acquisition as equity. Banks also allow the cost of debt to decrease as the company’s EBITDA increases. The fund has committed to provide cash support up to 100% of the current value of the takeover bid, $1.226 million.

All this gives Apollo more flexibility to participate in the war for Applus. If financial institutions agreed to provide a loan in the amount of 1,300 million, of which 885 million will be used to refinance the current debt, then the fund has 415 million to pay for the acquisition itself. That 415 million is the headroom Apollo has to improve its takeover bid, as the fund can shell out up to 1.226 million from its own pocket.

Under takeover law, Apollo is required to make a move. The rule sets the same acceptance period of one month for both proposals and that ultimately both investors must submit their proposal to the CNMV in a sealed envelope. Apollo, which first announced the takeover, will be able to improve its offer after that point if it remains 2% below the final price, the threshold under which it remains today.

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