Adevinta $13 bln bid puts minorities in a corner

Playing small. The planned buyout of a Norwegian classified ads company is boxing minority shareholders into a corner. Investors led by private equity firms Blackstone and Permira offered on Tuesday 141 billion crowns ($13 billion) to take Oslo-based Adevinta private. The cash bid isn’t overly generous, but top shareholders including eBay and Schibsted have already endorsed the bid. Minority investors don’t have much choice but to opt in.

At 115 Norwegian crowns per share, the offer values Adevinta’s equity at roughly $13 billion. It’s a 34% premium above the Norwegian group’s share price on Sept. 21, the day the suitors announced their intention to purchase the classifieds company. After including net debt of about $2 billion, Tuesday’s offer values Adevinta at just over 18 times the EBITDA analysts expect the company to generate next year, LSEG data shows. That’s hardly a premium to an average multiple of more than 19 times next year’s EBITDA for peers including Schibsted, Scout24, Rightmove, Auto Trader and Hemnet. The board of Adevinta said the offer is "within the range of what is fair" based on recent takeovers in Norway.

Investors could decide not to tender their shares and hope for a sweetener. With shareholders representing 72% of the capital already backing the offer, the bidding consortium is within sight of a 90% acceptance threshold that would force all remaining investors to sell their shares.

Some investors may hope that activist funds like Elliott Investment Management attempt to stall the takeover. That seems unlikely: the consortium has won over most share capital already. And buying a 10% stake to block the deal would cost a chunky $1.3 billion. Shares in Adevinta were trading at nearly 112 Norwegian crowns on Wednesday, suggesting little hope of a bid improvement.

Another option is to simply sit out the cash offer. But that would leave investors with illiquid shareholdings once the company is delisted: the buyout consortium has the right to waive the 90% squeeze-out threshold and take Adevinta private straight away. Moreover, if Blackstone and Permira's buyout deal doesn’t go through, eBay and Schibsted which each hold roughly 30% of the company, may decide to sell some of their stakes, hitting share price.

For minority shareholders, accepting the cash offer seems the best among a range of unpalatable options.

Context News

A consortium of investors led by private equity funds Permira and Blackstone on Nov. 21 said it had offered to buy the Scandinavian online classifieds group for about 141 billion Norwegian crowns ($13.1 billion). At 115 Norwegian crowns per share, the cash offer represents a 53% premium to Adevinta’s volume-weighted average share price of 75.4 Norwegian crowns over the three months up to Sept. 21. Shares of Adevinta traded at 111.4 Norwegian crowns per share at 1024 GMT on Nov. 22. Adevinta board on Nov. 21 said it is unable to recommend the offer to shareholders. The bidding consortium says it has support from existing Adevinta shareholders including Schibsted and eBay, accounting for 72.3% of the company's shares. The deal has a minimum acceptance threshold of 90%.

Author: Karen Kwok