European firms enjoy seller's bonanza

Boom time as US financiers compete with UK venture capitalists for private deals

THE wall of money hitting Europe as the region's venture capitals vie with US financial firms is creating a seller's market for companies looking to go private or spin off non-core units.

"It's already brutal," said a senior American deal-maker based in the City. "And it's going to get worse."

The supply of deals available to European and US buyout firms is increasing. A record $434bn in European mergers and acquisitions was announced in the year's first quarter. This restructuring will generate private equity opportunities. But the growing supply of buy-out opportunities looks set to be outstripped by the growth in money chasing those opportunities.

One private equity specialist calculates that buyout firms plan to spend $15bn a year over the next four to five years.

The bidding war for the troubled food manufacturer Hillsdown offers proof of the phenomenon, bankers said. The company is struggling, but the US private equity group Hicks, Muse, Tate & Furst is at daggers drawn with the UK venture capital firm Candover over it. On Thursday, Hicks, Muse raised its recommended bid to 141p a share, valuing it at more than pounds 500m. Within hours, Candover issued a statement saying it was considering beating this offer and urging Hillsdown shareholders to take no action.

Behind the scenes, meanwhile, two more deals in the works illustrate the strength of the sellers' market even more graphically. As part of the root-and-branch restructuring an-nounced last year, Siemens is selling its Electromechanical Components Group.

Last month Siemens retained JP Morgan to handle the sale. Ordinarily, Morgan would give interested parties six to eight weeks to review the information memorandum that is currently being circulated.

ECG, which makes electric switches to stop or redirect power, connectors, and fibre-optic devices, is a complex company with 12,400 employees spread over 16 manufacturing sites in more than 50 countries. German analysts say the sale of ECG will net Siemens somewhere around $800m (pounds 500m).

But Morgan has given interested parties only three weeks to bid. "They are the experts," said a Siemens spokesman. "If they say three weeks is enough, we trust them."

Morgan is conducting another German spin-off auction, for Hoechst Roussel Vet, the veterinary unit of the German chemcial company, under even tougher conditions for buyers. Two weeks ago, Hoechst announced it was accelerating its $21bn merger with French life-sciences group Rhone-Poulenc, and putting Hoechst Roussel Vet on the bloc.

The veterinary unit has 2,400 employees and operations in 79 countries. But Morgan is giving interested parties only 10 days to make a bid after receiving the information memorandum.

"Ten days is it," said one potential buyer.

"Since these companies are internal units of bigger companies, there is no way to get the financial details from sources other than the information memorandum."

Start your day with The Independent, sign up for daily news emails
i100 In this video, the late actor Leonard Nimoy explains how he decided to use the gesture for his character
Robert De Niro has walked off the set of Edge of Darkness
news The Godfather Part II actor has an estimated wealth of over $200m
Arts and Entertainment
Fearne Cotton is leaving Radio 1 after a decade
radio The popular DJ is leaving for 'family and new adventures'
Robbie Savage will not face a driving ban
Life and Style
Nearly half of all young people in middle and high income countries were putting themselves at risk of tinnitus and, in extreme cases, irreversible hearing loss
health Nearly half of all young people in middle and high income countries are at risk of tinnitus
It was only when he left his post Tony Blair's director of communications that Alastair Campbell has published books
people The most notorious spin doctor in UK politics has reinvented himself
ebooksA special investigation by Andy McSmith
Arts and Entertainment
arts + ents
Life and Style
Arts and Entertainment
James Franco and Zachary Quinto in ‘I Am Michael’
filmJustin Kelly's latest film tells the story of a man who 'healed' his homosexuality and turned to God
Arts and Entertainment
Public Service Broadcasting are going it alone
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Recruitment Genius: Office Manager / Financial Services

£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

Jemma Gent: Year End Accountant

£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

Jemma Gent: Management Accountant

£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower