EQT wins the upper hand in the bidding war with H&F for Zooplus

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(Bloomberg) – The Swedish private equity company EQT AB has offered to acquire the German online animal feed retailer Zooplus AG for 470 euros per share, thereby surpassing an offer by Hellman & Friedman.

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Zooplus welcomed the offer and gave EQT the upper hand in the takeover battle with H&F. EQT’s proposal, made through a holding company called Pet Bidco GmbH, valued Zooplus at € 3.36 billion ($ 3.94 billion) and was € 10 per share higher than H & F’s last offer. The EQT bid was also 0.9% above Friday’s closing price.

EQT and Zooplus have signed an agreement in which the private equity firm pledges to support significant growth investments. The transaction requires the approval of more than 50% of the Zooplus shareholders and is subject to further regulatory considerations.

Earlier this month, H&F increased its offer for the pet food retailer by 18% to € 460 per share after Zooplus confirmed that Bloomberg reports it is in talks with buyout firms KKR & Co. and EQT about counter-offers to H & F’s original offer. KKR then ended talks about a possible offer, but EQT stayed on the hunt.

EQT has already closed pet business deals and built a chain of veterinary practices under the nickname IVC Evidensia.

Having three prominent buyout houses competing for a listed company is a rarity in Germany. The EQT offer comes at a time when the Swedish company is grappling with a regulatory investigation into possible market abuse.

Peak cycle

The bidding war for the S-DAX-listed Zooplus is another sign that high valuations are not preventing some private equity houses from paying for targets, as they are sitting on record amounts of unspent capital commitments from their limited partners. Higher prices mean future returns will be more difficult to achieve.

Hellman & Friedman, led by Patrick Healy, recently launched one of the largest buyout funds of all time, with $ 24.4 billion. Alternative asset manager EQT has grown into one of Europe’s most active private equity firms, having been involved in some of the largest buyouts on the continent in recent years, including Nestle Skin Health.

Low interest rates and high returns have led limited partners – pension funds, insurers – to invest more money in private equity in search of returns, leading to most acquisitions in Europe in the first half of the year for over a decade. The pet supplies market has grown significantly in the past two years as homeworkers adopt furry friends, according to Euromonitor.

Euromonitor forecasts 7% growth in the global pet supplies market by 2026 as online transactions increase sales. The industry has already benefited from dog and cat owners looking for more premium products and the convenience of online delivery.

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