Publication Date: September 27, 2019
While European private equity activity falls shy of levels seen during the previous M&A boom, deals are increasing, and investors must monitor companies and transactions for opportunities. Within the region, risk arbitrageurs need to look no further than Axel Springer, Cobham, Inmarsat, Merlin and Osram Licht to understand that while a mega leveraged buyouts deal still alludes Europe, public-to-private LBOs are prevalent and announcements are unlikely to slow down. Brexit and economic malaise in Europe deter some investors, but this spells opportunity for private equity firms who have an appetite for undervalued stocks. Led by record levels of dry powder at buyout firms, private equity deal-making has been fuelled by strong historical investment returns, still-cheap borrowing costs and the attractiveness of privately-held companies, whose multiples are exceeding the public average. It is thus logical to anticipate more European buyouts and, in this report, we consider the most likely candidates. We dissect the five major public-to-private European LBOs in the marketplace and construct a list of 20 publicly-traded companies which we believe will be the next public equity takeover targets.
1. Dissecting the Pending European Public-to-Private LBOs 1.1 Axel Springer (SPRA GY) / KKR 1.2 Cobham (COB LN) / Advent International 1.3 Inmarsat (ISAT LN) / Apax, Warburg Pincus, CPPIB, OTPP 1.4 Merlin Entertainments (MERL LN) / Blackstone, KIRKBI, CPPIB 1.5 Osram Licht (OSR GY) / Bain Capital, Advent International 2. LBO Trends: Deal Structuring and Financing Considerations 3. European Publicly-Traded LBO Candidates Appendices A. Global M&A and Private Equity Trends B. The Current Private Equity Landscape C. Investment Challenges for Private Equity Firms
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