Private equity firm to increase offer for UDG Healthcare to £2.7bn | Mergers and acquisitions

US investor Clayton, Dubilier & Rice will increase its offering to Dublin-based UDG Healthcare to £ 2.7 billion as the latest private equity firm stake in a London-listed company.

CD&R, which also plans to acquire British supermarket chain Morrisons, is considering “a new and definitive offer” that values ​​the company at £ 10.80 per share, UDG said in a statement to the stock exchange.

Private equity funds have been looking for UK-listed bargains since the pandemic began when valuations plummeted. According to the data company Dealogic, foreign investors had announced 113 deals for takeovers or stakes in British companies by mid-June. These deals totaled £ 23.3 billion, more than any year since 2007, before the financial crisis.

UDG was forced to postpone an extraordinary general meeting to vote on the original deal, which was slated for Friday, after CD & R’s initial offer in May of £ 10.23 per share met resistance from shareholders.

UDG’s board of directors had recommended the first offer, but Allianz Global Investors, its largest shareholder, declined the deal, saying the offer was “opportunistic and undervalued UDG and its prospects clearly”.

Another major investor, M&G from the City of London, also turned down the offer. Rory Alexander, a fund manager at M&G, said on Friday that while the group was “pleased” that CD&R had increased its offering, “a potential offer of £ 10.80 on behalf of our clients would still fall short of our expectations,” said Rory Alexander the Financial Times reports.

As a result, UDG postponed the Extraordinary General Meeting as the two sides resume negotiations on a sweetened deal.

Weeks after CD&R made its first offer, Elliott Investment Management, a high profile activist investor who forced changes to large companies like US telecommunications giant AT&T, acquired a 3.1% stake in UDG.

UDG said it had not received any competing buyout proposals. Shares rose 1% to £ 10.57 on Friday.

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Last Saturday, Morrisons, the country’s fourth largest grocer and employer with 110,000 employees, turned down an unsolicited takeover offer from CD&R worth £ 5.5 billion.

Morrisons’ share price rose to 233p from 178p prior to Friday’s offering, suggesting investors are hoping for an improved offer – or a competitive offer – even though it was just above CD & R’s original 230p per share offer lies.

Labor has called on the government to step in to ensure that a possible private equity takeover of the supermarket chain would not harm Britain’s food security, damage agriculture or cause job losses.

The spate of acquisitions has led to broader concerns that UK companies in particular may be more attractive targets as uncertainties about Brexit weighed on valuations.