The ace of KKR, Cinven and Providence: MásMóvil will pay them 22.6 million if their bid does not come out
The KKR, Cinven and Providence funds want to take control of the operator MásMóvil and they have the approval of the board of directors of the owner of Yoigo. An alliance that can be materialized in a millionaire compensation in case the purchase offer does not go ahead. It must be taken into account that the public offer for acquisition (takeover bid) is conditional on obtaining the backing of 50% of the capital; and 29% of it has already advanced that they see it with good eyes.
The “Board of Directors of MoreMobile recognizes, at the time of signing the agreement, its positive opinion on the offer and the offer price ”, the 22.5 euros per share proposed by the three firms in their joint offer, as stated in the document sent to the National Securities Market Commission (CNMV).
The council “considers it to be an opportunity to create value for shareholders and other‘ stakeholders ”, he adds in the document sent this Monday. For this reason, the management body admits that it intends to make a “positive” opinion on the offer, regardless of the fact that a competing offer may appear to be on the rise.
And, in that case, the three funds have an ace up their sleeve. "MásMóvil has promised to pay the offering company (the funds) 22.6 million euros (…) to compensate for damages and costs incurred in the preparation of the offer "in the event that it is not settled for different reasons. For example, due to a potential competing offer.
This payment has received the approval of the council and the favorable report of the financial advisor of MásMóvil. We must remember that in this operation, the órgano teleco ’management body has had three advisers: Clifford Chance, in the legal part; Goldman Sachs, as M&A advisor; and BNP as financial and rating advisor.
In addition, there are three other cumulative conditions that would lead to this payment of 22.6 million euros. The first would entail that the MásMóvil shareholders meeting approved “a significant operation during the period of acceptance of the offer”Or, also, announce“ the execution of an agreement regarding a significant operation but have not held, prior to the end of the period of acceptance of the offer, the corresponding general meeting of MásMóvil ”to assess it.
The second condition, as referred to the CNMC, that "the weighted average price ”of‘ teleco ’shares in the last five days of the acceptance period exceeds, at least, 3% of the offered price per share”For the funds including any price increase that may have taken place during the bidding process or that the acceptance of the takeover bid falls below 50% of the share capital.
The third clause that would give rise to this compensation contemplates that "the offer is not settled because any of the conditions for its effectiveness is not met (or the offering company does not renounce it) and, therefore, the offering company does not acquire shares ”with the takeover bid.
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