Candover takeover talks collapse as suitor walks away

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The Independent Online

Talks to buy Candover have collapsed after its Canadian suitor failed to agree terms with the private equity group's bondholders.

Candover, which was badly hit in the downturn, announced its potential bidder had walked away after almost three months of negotiations. Yesterday's brief statement from the group said that after being pressed to clarify its position, the prospective bidder was "no longer considering making an offer and all talks have been terminated".

While the London-listed buyout group has never released the name of the interested party, it is understood to have been in talks with the $70bn Canadian pension fund Albert Investment Management Corporation (Aimco) since April.

Deal insiders said the talks fell apart over the company's failure to agree terms with Candover's debt holders. One said the UK investors holding £200m in private placement bonds bond were the "key stumbling block". Aimco was unwilling to pay off the value of the debt, as part of the "change of ownership" clause that would kick in following a takeover. The pension fund had instead offered to sweeten the terms to roll the debt over.

This followed news the previous evening that Candover had sold off its nappy-making business Ontex for €1.2bn (£1.01m), the largest buyout in Europe this year. It sold the business to TPG and Goldman Sachs' private equity arm, although it was forced to conclude the deal at a 30 per cent loss on the company it had bought in 2003.

Candover ran into trouble during the downturn, which led to the suspension of a €3bn fund after it admitted it could breach the covenant on its bonds.

Yet in March, the chief executive Malcolm Fallen told investors that after several crisis years the company had been stabilised. He said a restructuring of both the firm and the 2008 fund, as well as asset sales, had driven "our much-improved financial health".

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