This was published 5 years ago
Trade Me board backs $2.4 billion takeover bid from private equity
By Colin Kruger
New Zealand's leading online marketplace is set to change hands after its board accepted a $2.4 billion bid from British private equity group Apax, while leaving the door open for a potentially higher bid from rival suitors, Hellman & Friedman.
Trade Me, whose shares are traded on the ASX and the New Zealand stock exchange, announced it has entered into a scheme implementation agreement with Apax, subject to regulatory approvals, an Independent Advisor recommending the deal and "in the absence of a superior proposal".
"The Apax Funds have increased their offer price since the indicative proposal, following the completion of their due diligence," said Trade Me chairman David Kirk.
Trade Me chairman David Kirk. Credit: Ben Rushton
"After careful consideration, the board has unanimously concluded that this offer is consistent with our efforts to deliver maximum value for shareholders," he said.
The shareholder vote on the scheme is scheduled for April next year.
The company had been expected to make an announcement on Wednesday after Apax had completed its due diligence and decided whether it would make a formal bid for Trade Me.
Hellman & Friedman is still conducting due diligence, but Trade Me underlined its committment to the Apax offer with a $NZ19.2 million break fee if it walks away from the deal.
Apax made an indicative $NZ6.40 per share cash offer last month and was given due diligence access by the Trade Me board "to facilitate a binding offer."
Last week, US private equity group Hellman & Friedman also put in a non-indicative offer of $NZ6.45 a share and gained due diligence access. Its bid has been matched by Apax.
Shares in Trade Me jumped 4 percent to close at a record high of NZ$6.38 on the NZX after Wednesday's announcement.
It would not be the first time Trade Me has been acquired. Fairfax Media bought the company in 2005 for $NZ700 million, with Mr Kirk playing an instrumental deal in his then role as Fairfax CEO.
Trade Me is an attractive target due to the fact that it leads the New Zealand online classified market for automotive, jobs and real estate.
According to Morgan Stanley, the migration of ads from print to online leaves plenty of upside for future investors.
"We estimate in New Zealand only 60 per cent of ad dollars are online in FY19, vs a more mature Australian market at 90 per cent. This underpins Trade Me's earnings growth trajectory," the broker said last month.
The delisting of Trade Me will be a blow to the NZX which lost another of its tech success stories, Xero, to the ASX earlier this year.
This week, Trade Me announced that its departing chief executive, Jon Macdonald, will not retire this month as planned. He will remain in place on an interim basis while the company hunts for a replacement.