Tag Archive for: takeover

Zardoya-Otis Takeover – Effect on Columbus fund

On Thursday 23rd September Otis Worldwide announced its intention to acquire the outstanding shares of its Spanish subsidiary, Zardoya Otis at a 31% premium to the prior close. This marks the third takeover announcement for a holding in the Columbus fund in as many months. As for the other recent takeovers, Akka Technologies and Zooplus, we are sorry to lose our holding in the business but encouraged that others identify the value that we see.
Otis Worldwide, the $37bn US listed parent holds 51.01% of Zardoya’s shares having originally invested almost 50 years ago. A full takeover has been rumoured for many years but became more likely after Otis was spun out of United Technologies last year.
Zardoya Otis was a relatively recent purchase (May 2021) for the Columbus fund as we felt the stability and visibility of the business was far from reflected in the share price. Indeed even after the 30% premium offered by OTIS the shares still trade at a discount to the peer group (15.5 EV/Ebitda 21 vs. 18.8 EV/Ebitda average for Otis Worlwide, Kone, and Schindler)  However, since Otis already held the majority there is unlikely to be a competing bid to provide a fuller valuation for shareholders.

ZOOPLUS agrees €3bn private equity takeover – Effect on Columbus fund

On Friday last week (13th August) our position in Zooplus, the German online pet supplies retailer, soared by 40% to €390 per share on news that management had agreed a €3bn all-cash takeover bid by US Private Equity group Hellman & Friedman.

Prior to the takeover the Columbus fund held a 2.6% position in Zooplus having originally purchased the stock in August 2020. Before the bid was announced the shares had already performed well, returning 73% since our initial purchase. The bid comes just over two weeks after the announced acquisition of another fund holding, Akka Technologies.

Zooplus was a beneficiary of the covid disruption, as both the penetration of online shopping and pet ownership across Europe rose sharply as people were forced to stay at home. In 2020 the Group’s revenues surpassed €1.8bn, up just over 18% in the year. We anticipate that Zooplus will continue to benefit from these trends in the long-term, with the Group forecasting total online sales in the European pet supplies category to rise 4-fold over the coming decade with the sector achieving sales (including traditional channels) of close to €50bn by 2030. Following the deal Zooplus’ management team are expected to stay in post and both the executive and supervisory boards and see the deal as bringing “additional sector expertise, hands-on support, the financial firepower, and a stable ownership structure to expand its (Zooplus) competitive lead and secure sustainable long-term growth.”

From Columbus’ perspective, it is gratifying that others appreciate the value and growth potential that we saw in the stock. Having reviewed the European online retail space in early 2020 we selected Zooplus over better known listed players after being drawn to the increasing penetration of pet product sales over the internet, Zooplus’ early lead in this market and their impressive operational performance. We believe they have a strong future ahead.

(Source of the image: zooplus)

Adecco Bid for Akka Technologies

Wikimedia Commons

On Wednesday this week (28th July) our position in Belgium’s Akka Technologies soared by 95 % on news that management had agreed a takeover bid by Adecco Group, the Swiss recruiter, for €49 a share. The offer values Akka at an enterprise value of €2bn. Prior to the takeover, Columbus held 3% in Akka, representing one of our top 10 positions.

Strategically the deal appears to make sense as combining Akka with Adecco’s engineering and IT consultancy subsidiary, Modis, will create a powerhouse in the sector, just behind the industry leader, Capgemini. Adecco see considerable cost and revenue synergies from the deal and appreciate the growth potential inherent in this industry which was largely being ignored by investors for Akka as an independent group.

Both groups are strong proponents of the growing importance of ‘Smart industry’ for accelerating innovation and returns for their customers. In the words of Jan Gupta, President of Modis, “Smart Industry is where IT and engineering technologies converge into a digital and connected world, and we look forward to joining forces with Akka, combining their excellent market reputation in engineering with Modis’ strong digital experience.”

At Columbus we see the deal as a vindication of our belief in the business which has at times been controversial and suffered several setbacks during our holding period. After weakness in the stock last year, we reviewed the holding and increased our position, leading to Akka being in our top 10 positions at the time of the takeover. Our view is that investing is an occupation where conviction and patience are important, and we should celebrate when the two are well rewarded.

(Source of the image: Wikimedia)