Candover withdrew its long-standing ¿1.5bn (£1.04bn) bid for Stork, the Dutch engineering group, yesterday after it was unable to reach agreement with a block of resistant investors.
The UK private equity giant said that it continues to talk about "alternative structures" with Stork, which makes airplane parts for Airbus and Boeing, and with LME, the blocking investor group. A joint statement issued by the company and Candover said: "It has become clear that one of the key conditions to the offer for all shares of Stork... will not be satisfied as LME will not tender its shares under the current offer."
Candover launched its offer for Stork in June. Marel, an Icelandic maker of food-processing equipment, began an effort to block the ¿47-per-share offer. With partners Eyrir Invest and Landsbanki, the Icelandic bank, it formed LME, which accumulated a 43 per cent stake.
Candover's offer was conditioned on 80 per cent approval, making getting the green light from LME essential. Marel is understood to covet Stork's food systems unit, which makes machines that grind up chickens and cows and are used by many of the world's biggest food companies. Candover extended the official offer period last week in a last-ditch effort to reach a compromise agreeable to LME.
Although the companies continue to talk, the deal is seen as much less likely to occur. When Candover first bid in June, it lined up a financing package typical of the roaring buyout boom of the time. Since then, the global credit crunch has essentially closed the debt markets to some types of deals; those deemed fundable will be so on much less favourable terms than would have been available just a few months ago. In some cases, the new funding environment can destroy the economics of a deal.
Last week, Guy Hands, head of buyout giant Terra Firma, said that the "good old days" of the recent buyout boom were gone. Nicholas Ferguson of SVG Capital also predicted a slowdown.
Candover appeared to set a final deadline for talks with Stork and LME, saying that any further announcements on the deal would come "in any case not later than the first half of October 2007".
Stork began looking at its options last year after hedge funds Paulson and Centaurus Capital, with more than 30 per cent of its shares, agitated for a breakup.
Aside from airplane parts and food processing systems, the company is a major technical services provider to the utilities, energy and chemicals sectors.Reuse content