Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>In December (13 Dec after trading hours), the FT had an <a href="https://www.ft.com/content/f5205604-ff0f-11e8-ac00-57a2a826423e" target="_blank">article</a> noting that Germany's leading property classifieds firm <a href="https://www.smartkarma.com/entities/21629" target="_blank" data-smartkarma-citation="entities:21629:1">Scout24 AG (G24 GR)</a> (also known for auto classifieds across Europe) was possibly looking to sell itself and that PE firms were lining up to bid. Silver Lake, which had bought British player ZPG (which operates property portals Zoopla and PrimeLocation) for $2.8bn in July 2018, was mentioned as a bidder. Once owned by Deutsche Telekom, control of Scout24 was sold to Blackstone and Hellman &amp; Friedman LLC in 2013-14 (H&amp;F spent €1.5 billion to take a 70% stake in 2013, and Blackstone bought a stake of undisclosed size in 2014), and they listed the company in 2015 with an initial market cap of €3.2 billion. The IPO was €1.16 billion and both sold down, with H&amp;F fully exiting in a placement in 2016.</p>
<p>The share price <em>had been</em> doing well until Q3 last year when German lawmakers, anxious with skyrocketing property prices, started looking at revamping the structure of real estate transaction costs so that they were borne by sellers rather than loaded onto buyers. The shares fell.</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/533/original/Screenshot%202019-03-29%20at%202.45.25%20AM.png?1553798952" class="editor-image img-responsive" data-smartkarma-image-id="83533"></figure>
<div style="text-align: left;" class="content-caption">source: investing.com</div>
<p>A combination of Blackstone and Hellman &amp; Friedman LLC launched an non-LBO LBO for <a href="https://www.smartkarma.com/entities/21629" target="_blank" data-smartkarma-citation="entities:21629:1">Scout24 AG (G24 GR)</a> in mid-January at €43.50/share (€4.7 billion) which was about an 8% premium to the then-current market price, which had already been juiced because of speculation starting after the FT article in late December. The company rejected the Offer saying it was too low. </p>
<p>The two buyers came back in mid-February with a <a href="https://scout24-offer.com/download/companies/ma1023/ma1023pflicht/Section10Announcement_en.pdf" target="_blank">Takeover Offer</a> priced at €46.00/share, 5.7% higher than January's foray and 27% higher than the level pre-FT article; that was about 25x earnings and 28x 2019e cashflow, which is a bit lower than Silver Lake's ZPG buy multiple. Both Scout24’s Management Board and Supervisory Board agreed to support the offer and said they believed that the transaction is in the best interest of the Company, and an Investment Agreement was signed between the three companies.</p>
<p>The unusual thing about this deal is that the two PE firms are looking to buy a minimum of 50% plus one share, and leave the company listed. The shares jumped to €46 and have been trading at just below to slightly through, leaving many to think that this was a setup for a strategic buyer or possibly Silver Lake to come in over the top. </p>
<h2>The New News</h2>
<p>Yesterday, the BidCo officially <em>launched</em> its <a href="https://scout24-offer.com/download/companies/ma1023/ma1023/20190328_OfferDocumentPulverBidCoGmbH_en.pdf" target="_blank">Tender Offer</a> at €46, due to run through 9th May.</p>
<p>More discussion below.</p>

In December (13 Dec after trading hours), the FT had an article noting that Germany's leading property classifieds firm Scout24 AG (G24 GR) (also known for auto classifieds across Europe) was possibly looking to sell itself and that PE firms were lining up to bid. Silver Lake, which had bought British player ZPG (which operates property portals Zoopla and PrimeLocation) for $2.8bn in July 2018, was mentioned as a bidder. Once owned by Deutsche Telekom, control of Scout24 was sold to Blackstone and Hellman &amp; Friedman LLC in 2013-14 (H&amp;F spent €1.5 billion to take a 70% stake in 2013, and Blackstone bought a stake of undisclosed size in 2014), and they listed the company in 2015 with an initial market cap of €3.2 billion. The IPO was €1.16 billion and both sold down, with H&amp;F fully exiting in a placement in 2016.
The share price had been doing well until Q3 last year when German lawmakers, anxious with skyrocketing property prices, started looking at revamping the structure of real estate transaction costs so that they were borne by sellers rather than loaded onto buyers. The shares fell.

source: investing.com
A combination of Blackstone and Hellman &amp; Friedman LLC launched an non-LBO LBO for Scout24 AG (G24 GR) in mid-January at €43.50/share (€4.7 billion) which was about an 8% premium to the then-current market price, which had already been juiced because of speculation starting after the FT article in late December. The company rejected the Offer saying it was too low. 
The two buyers came back in mid-February with a Takeover Offer priced at €46.00/share, 5.7% higher than January's foray and 27% higher than the level pre-FT article; that was about 25x earnings and 28x 2019e cashflow, which is a bit lower than Silver Lake's ZPG buy multiple. Both Scout24’s Management Board and Supervisory Board agreed to support the offer and said they believed that the transaction is in the best interest of the Company, and an Investment Agreement was signed between the three companies.
The unusual thing about this deal is that the two PE firms are looking to buy a minimum of 50% plus one share, and leave the company listed. The shares jumped to €46 and have been trading at just below to slightly through, leaving many to think that this was a setup for a strategic buyer or possibly Silver Lake to come in over the top. 
The New News
Yesterday, the BidCo officially launched its Tender Offer at €46, due to run through 9th May.
More discussion below.

Scout24 Tender Offer Launched: Price Still Not Quite Full

Germany

Scout24 AG is an operator of digital classifieds platforms. The Company specializes in the real estate and automotive sectors in Germany and other selected European countries.

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Scout24 Tender Offer Launched: Price Still Not Quite Full

In December (13 Dec after trading hours), the FT had an article noting that Germany's leading property classifieds firm Scout24 AG (G24 GR) (also...

Travis Lundy