Insignia bids raise company value to $3.3bn
The increased bids for Insignia value the company at $3.3 billion, with Bain Capital, in particular, being persistent with the revised bid, marking its fourth offer.
It was announced on 7 March that Bain Capital and CC Capital had made revised offers for the company after a period of due diligence. Both firms opted to increase their bids from $4.60 to $5 per share.
This increases the value of the financial services firm from $3 billion under a bid of $4.60 per share to $3.3 billion, which is a 10 per cent increase.
Shares in the company rose by 11.6 per cent after the latest announcement, and are up by 34 per cent since the start of the year. Since the first announcement on 12 December, shares are up 37 per cent.
In light of both firms making separate matching bids following their due diligence, Insignia said it opted to progress to the next stage of due diligence with both parties. It entered into an exclusivity deed with both firms which will last four weeks, and due diligence is expected to be completed within six weeks, Insignia said.
“After careful consideration, the board has determined the terms of each proposal to be attractive for Insignia Financial shareholders and has concluded that it would be in the best interests of Insignia Financial shareholders that Insignia Financial enter into an exclusivity deed with each of Bain and CC Capital to further progress their respective proposals.”
While it is not uncommon for exclusivity deeds with multiple parties, care will be needed to ensure both are treated fairly and the deeds don’t materially conflict.
Original bidder Bain Capital, in particular, is being particularly persistent in its approaches; its first bid was for $4 per share back in December which was rejected by the Insignia board. It then raised it to $4.30 on 11 January, and $4.60 on 23 January – both increases in response to bids from rival CC Capital.
The latest revision to $5 per share marks its fourth bid in four months for the company.
Commenting, financial services M&A expert, Tony Beaven, said: “Bain would have a ceiling price that they won’t go beyond unless, during the due diligence process, revised financial forecasts or details uncovered gives Bain a better ceiling offer price.
“The devil is always in the details of due diligence, and a good due diligence team will be able to intensively review the business to see its real value. Conversely, as this is very publicised. One of the bidders pulling out, especially during the due diligence phase, will no doubt add questions and further due diligence from the other bidder.”
CC Capital has made three bids: $4.30 on 3 January, $4.60 on 17 January, and $5 on 7 March.
A third bidder, Brookfield, also made a bid of $4.60 and progressed to the initial stage of due diligence. While the firm was not mentioned in the latest ASX announcement, it is understood the conditions of the latest exclusivity deeds mean it can still submit a revised offer after the no-shop and no-talk restrictions have lifted.
Under these, Insignia is restricted from taking or refusing to take any action regarding a genuine written competing proposal for four weeks. Once this has been lifted, the firm will be able to consider if any competing proposals represent a superior proposal to the Bain and CC Capital ones.
AUTHOR
Laura Dew
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Both Bain Capital and CC Capital have made revised bids for Insignia Financial after completing a period of due diligence.
