– USG People (USG NA): Dutch recruitment firm USG people announced that Japanese Recruit Holdings Co (6098 JP) (with EV of around EUR 14bn) has made an all-cash bid on all outstanding USG shares for EUR 17.50 per share, valuing USG at around EUR 1.6bn. The bid is supported by the Executive and Supervisory Board of USG and 19.8% founding shareholder Alex Mulder. Deal is conditional on typical Dutch (pre-)conditions like AFM approval, 95% shareholder acceptances (waivable) and required competition clearances. Offer closing targeted for 2Q16. Fully valued 30% premium bid valuing USG at 2015 and 2016 P/E of 24x and 16x and EV/EBITDA of 13x and 10.5x at 10-30% premium to direct peers Adecco and Randstad (blended trading at 2015 and 2016 P/E of 16x and 14x and EV/EBITDA of 11x and 9.5x).
Deal is typical European geographical expansion deal for Japanese/Asian buyer as 90% of USG’s revenues stem from Netherlands, Belgium and France – while Recruit is mainly focused on Japan and North-America. Main optionality related to interloper: although Randstad and Adecco would be most likely suspects, unlikely to see them coming in given a) USG People already provides too much exposure to the Benelux/French markets where they are present, and b) Adecco/Randstad/Manpower seem to focus on a selective M&A strategy without doing significant deals (like USG at more than EUR 1.5bn). Typical Dutch (high 95% acceptance) public offer with no financing or regulatory risk. Should be treated as solid rate of return 5-6 months deal with some (limited) upside optionality (8% annualised for 6 months deal translates in EUR 16.8, 6% at EUR 16.98 vs trading at EUR 17 now)
– Ten Cate (KTC NA): Gilde consortium extends offer by about 4 weeks till 14 January without increasing offer price. Extension puts the sting out of the situation for some time now. Under Dutch take over law, bidder can still increase the price at any time during this additional offer time (according to Article 15, bidder can increase at any time during an additional acceptance period; and should the increase statement come later than 7 business days before the additional extension period (after 06 January 2016), then the offer period has to be extended automatically by another 7 business days). With this mere offer extension, bidding Gilde consortium has played it clever and still managed to keep all of its options open to either shake out the weak arb hands (and get above the 66.67% threshold) and/or still bump to get to the higher 95% squeeze out/delisting level.
– BG Group (BG/ LN): Guardian reported last night that a group Shell shareholders, accounting for about 10% are expected to publicly declare they are in favour of the BG deal declare so publicly in the next day or two. Based on recent, public UK editorial and shareholder quotes, so far more institutional shareholders are understood to be in favour (Allianz Global Investors, Old Mutual, Qatar Investment Authority, Henderson, Aberdeen Asset Management, AXA Investment Managers, Artemis Global Energy Fund) rather than understood to be against (Standard Life Investments, Jupiter Fund Management). With some positive shareholder comments overnight, Shell’s board locked-in recommendation, and relatively low 50% shareholder threshold required for the Shell vote, we would now step in again initiating new position around GBp 120 spread (after having held off on the spread for last weeks).