Thursday, July 31, 2014

European Private Equity Deal Activity 2014 update; Darden's Takeover Defenses

A key focus of our acquisition finance course is understanding the nature of changing deal markets and incorporating that knowledge into deal structure.  Pitchbook is out with their latest PE report on European Activity and it provides useful updates.  Just a few of the highlights:

For the 6th quarter in a row PE investment in Europe has exceeded 50 billion euros.  Also, the popularity of bolt on investments is increasing, now representing 44% or European buyout activity.  A bolt-on investment is one made through an existing portfolio company rather than a direct investment of funds in a new industry.  Whereas direct investments generally involve new areas of investment, bolt-ons are typically in the same or related industries as the portfolio company.   Further details on these and other highlights can be accessed here.
Also, in last week's post regarding Allergan and Valeant we noted:

"The Best Takeover Defense: Don't leave Money on the Table.  Anticipate value creating activities and implement them, however painful.  Continuously evaluate your firm's strategy, particularly in light of a changing environment.  Consider Are You a Takeover Target? Take the corresponding action before external markets force change upon you. Don't wait for a hostile bidder to force you into action.  Indeed, Do Unto Thyself."

Allergan was taking a page from their suitors book and slashing R&D.  Another great example is in Bloomberg today.  Darden Restaurants, long facing hostile activist investors, has retired its chairman and CEO and opened the board for activist representation, all actions desired by the activists.  According the story, however, the actions may have been too little, too late.  

As we said, 'Don't wait to implement value increasing actions.'

All the best,


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