who gives more for Applus

The battle for control of Applus is about to enter a decisive stage, with the market betting on a new round of price increases through competing takeover bids (takeover bids) formulated for the 100% Spanish company.For Apollo Global Management and a consortium of I Squared and TDR Capital.

It all started in June 2023, when Apollo submitted its first takeover bid for Applus. 9.5 euros per share; I Squared and TDR Capital responded in September, 9.75 euros each. Now relevant offers 10.65 and 11 euros.

These are the characteristics of the proposals and the further steps in the dispute.

Bidko Apple

Apollo, through Manzana Bidco, announced two weeks ago an agreement to purchase 21.85% Plus various hedge funds at a price of 10.65 euros per share. Yesterday the operation was completed, approximately 300 million euros. In parallel, the New York fund extended the same price until its 100% takeover offer. valuing the company’s capital at $1.3 billion.

The CNMV approved this improvement to the proposal last Friday, which also forced Apollo waive the minimum acceptance condition, previously located at the level of 75%. That is, Manzana will not be able to refuse the offer, regardless of the number of shares that participate in it.

To finance the operation, Apollo has a $1.3 billion loan from 8 banks: Santander, BNP Paribas, UniCredit, Mizuho, ​​Natixis, SMBC, Sabadell and Société Générale. If successful, this debt will help the offeror refinance 900 million of Applus’ liabilities and pay for approximately 400 million shares offered. Manager through his Apolo put another 900 million.

Amber capital

In response to Apollo’s maneuver, the consortium I Squared and TDR last Friday improved its takeover offer for Applus from €9.75 to €11, implying a valuation of 100% of the industrial certification and vehicle inspection (ITV) company. 1,420 million euros (He would also have to take on $900 million in debt).

In addition to raising prices, these allies decided to lower the minimum acceptance requirement. from 75% to 50.01%to thus prevent Apollo – along with clueless shareholders who have no intention of participating in any of the takeover bids – from blocking its bid.

Banks that supported the takeover proposal of the consortium: Jefferies, BofA, Barclays, HSBC, Goldman Sachs, Crédit Agricole, Morgan Stanley and PJT.

The offer, made through Amber EquityCo, was approved last week by the Spanish government and is currently awaiting approval from the CNMV.

Calendar

Once CNMV approves the takeover bid for Amber EquityCo, 30 day period during which shareholders will have to decide whether to accept any takeover bid or retain their ownership rights. At that point, Applus’ board of directors, advised by JPMorgan and Evercore, will have to make its recommendations to investors.

At the end of the period, two bidders – if they are still participating in the competition – will have the opportunity Submit your final proposals in a sealed envelope.

Scenarios

Applus price was 11.3 euros, since the market expects a new price increase from at least one of the trading participants. In fact, the goldfish funds that sold Apollo were buying more shares so they wouldn’t miss the final battle.

The most anticipated scenario is that the final round is reached in a sealed envelope.. Apollo, which already owns a 22% stake, has an interest in encouraging the bid because if it doesn’t win, it can at least sell its stake at a capital gain to I Squared and TDR. This consortium, after more than a year of work on the takeover bid, does not seem to want to lose Applus for a few euro cents.

There are two more alternative options. First, how did this happen in the disputes over Cortefiel and Abertis– the two bidders agree to combine their takeover bids and share Applus’ capital.

Another possibility is that Apollo decides maintain your current membership, although I Squared and TDR capture the majority of the shares, which could make it difficult for the Spanish company to be delisted from the stock exchange and integrated into Amber EquityCo.

Investors are now clearly betting that hostilities will continue, and no one is ruling out that the price could rise. above 11.5 euros.

Morgan Stanley accounts for 16.7%.

Yesterday, Apollo Global Management completed the purchase of 21.85% of Applus following an agreement reached with several capital-based goldfish funds such as Samson’s Rock, Sand Grove and Millennium. Thus, this manager becomes the first shareholder of the company and has a privileged position in the takeover war.

But the shareholder movements at Applus don’t end there. Morgan Stanley said yesterday that it has 16.7% of the capital of the acquired company.

Market sources indicate that part of this action may be in line with the fact that Morgan would act as an intermediary to facilitate the transfer of ownership of the company. hedge funds to Apollo. But it can also react to conclusion of derivatives contracts with funds continuing to bet on higher prices in takeover bids.