(Acquisitions Monthly) The past year has seen the return of the hostile bid approach, requiring advisers to deploy their full range of defensive skills to fend off such opportunistic offers, or force the bidders to raise their price.
Finding the right balance between those two goals can be notoriously tricky. In theory, National Express defended itself successfully from a series of approaches this year, initially from transport rival First Group then from private equity group CVC in conjunction with major shareholder the Cosmen family and latterly Stagecoach.
However, this victory looks Pyrrhic. The company’s share price is 25% below the high point it reached during the offer period. Added to that, the board also now faces a disgruntled shareholder base. Hedge funds are seeking quick profits while its largest investor is at strategic odds with the directors and unwilling to support a rights issue.
That is far from ideal. A better outcome has transpired for Anglo American after rival miner Xstrata suggested a merger of equals in late June. Since the latter decided in mid-October not to submit a formal proposal, after a prompt from the Takeover Panel, Anglo’s shares have risen 17%. The company also remains independent.
In a sense, Anglo American was in a strong position. Xstrata’s nil-premium offer was not particularly compelling and Anglo had key South African shareholders that were never likely to support an alternative proposal.
