Permira's €570m offer to swallow Telepizza

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The Independent Online

UK private equity group Permira is poised to snap up Spanish fast-food giant Telepizza in a €572m (£390m) deal, seeing off rival CVC in the process.

The board of Spain's biggest pizza-delivery chain rejected CVC's offer last week, despite it being €60m higher than the recommended bid from Permira. The target's board voted unanimously against CVC, qualifying its approach as "hostile".

The food fight between the rival London buyout firms broke out last month, when CVC came in with a €2.40-per-share offer just one day before the window closed for counterbids.

Telepizza, which trades on the Madrid stock exchange, had agreed earlier in the month to be taken over at €2.15 per share by Permira. The founding Ballve family partnered with Permira and had agreed to vote its 20.5 per cent stake in favour of the €572m deal, which would see the company delisted.

CVC's hostile bid was a first for private equity in Spain, and it did not go down well.

CVC made the offer via Grupo Zena, a rival Spanish company it owns and which runs franchises for Pizza Hut, Burger King, Foster's Hollywood and other restaurant businesses. The idea was to integrate its operations with Telepizza.

Ernst & Young, adviser to Telepizza, said CVC's bid would have "negative effects and unfavourable consequences" for shareholders and employees.

In particular, E&Y warned that the integration with its primary competitor would lead to restaurant closures and lay-offs, Telepizza is also more efficient, productive and profitable than Zena, it argued.

Having already agreed to partner on the deal with Permira, Telepizza president Pedro Ballve excused himself from the recommendation vote.

CVC and Permira declined to comment. A spokeswoman for Zena said that it would not withdraw the offer.

If Permira does end up taking Telepizza home, the deal would be a boost for the group's operations in Spain, where it has managed to close just two buyouts since opening a Madrid office two and a half years ago.

However, Permira could still lose out to Ibersol, the Portuguese restaurant group - though this is unlikely.

It has offered one cent more per share than CVC but this is conditional on Telepizza removing takeover barriers to the Ibersol offer. An earlier, cheaper bid was ruled out.

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