KKR completes the last fringes to launch Telepizza. The company confirmed suspicions on Friday and announced to the CNMV a takeover of the fast food chain at 6 euros per share. The value in 604 million euros.
The venture capital fund, which owns 28.32% of Telepizza shares, will seek the remaining 71.68%, valued at around 430 million. For this, it completes a macro loan with Santander, Barclays and Citi, according to financial sources to CincoDías. The last two entities also act as advisers to the operation. Allen Overy is the advisor to financial institutions. Uría Menéndez is on the side of KKR and Baker McKenzie, of the company, according to these sources.
The financial muscle with which KKR will try to get Telepizza is not limited to debt. The fund led in Spain by Alejo Vidal Cuadras is not launched by Telepizza alone. He does so as the leader of a consortium formed by Artá Capital and Torreal, the private equity of the March and Abelló families, respectively, and the high-wealth bank J. Safra Group, owned by the Brazilian millionaire Joseph Safra.
The plan is for KKR to be the main shareholder of the new Telepizza. Afterwards, the March fund will control around 6%. And the other two shareholders will have smaller stakes. This group of funds has already reached a commitment with a minority shareholder to attend the takeover in the first five days of the acceptance period. These are Santander Asset Management (5.26%), Alliance Bernstein (3.214%), Formuepleje (2.3%) and Axxion (2.3%), which add up to 12.74% among the four. KKR and its partners are thus guaranteed to control 41.29% of the company.
These shareholders also undertake to vote against the issuance of new Telepizza securities, obtaining financing, any corporate transaction and the payment of dividends. KKR reserves the right to reduce the price obtained if it is paid back to shareholders.
New York-based Alliance Bernstein fund, controlled by French insurer Axa, and Danish Formuepleje have pledged to sell their more than five million shares to KKR even in the case of a counterpart. However, the other shareholders leave the door open to change their opinion in the event of a business war. Santander's management will be able to break its commitment in case there is a counterpart. Axxion can only do so if the bid exceeds the KKR offer by 10%.
It remains to elucidate what decision the proprietary shareholders will take of the remaining 58.71%. Among them, according to the records of the CNMV, Citi with 3.86% (which is one of the advisory banks and also finances the operation) and the international fund managers of Fidelity, Invesco, Highclere and IG Investment, which they control 11.11%. Bestinver will also play a relevant role, which this spring opted for Telepizza through two of its stock funds.
KKR is not worth controlling 50.01% of the company. It aims to take it out of the market, as they did in 2006 Permira and the Ballvé family. KKR entered in 2014. For this reason, one of the conditions it places on the offer is that it receives 90% acceptance of the actions to which it is addressed. Although formally the offer is for 100% of the titles, the truth is that as KKR already controls 28.32%, only the remaining 71.68% are eligible to go to the takeover bid. That is to say, for the OPA to triumph over the 100.72 million shares that Telepizza has, 92.67 million must end up in the hands of KKR and its partners.
Once the takeover is completed, the objective of KKR is to promote the exclusion of the company's stock market. The investor who launches an offer and manages more than 90% of the shares to which it is addressed, may require the rest of the shareholders to sell their securities at the price of the bid (squeeze out, in the jargon). If this is not possible, KKR reserves the right to withdraw this condition from the offer. If the CNMV authorizes it, it can be withdrawn from the Stock Exchange in the event that it sponsors an independent valuation report. You must launch a purchase order to the market for one month at that price.
In addition to obtaining the approval of the relevant authorities in matters of competition both in Europe and in Spain, another of the conditions to complete the OPA is that Telepizza abandons its activity and business in Iran. At the end of 2017, it had seven stores in the country, which it landed in July of that year.
- When KKR confirmed its takeover by Telepizza, the company had been suspended since Thursday afternoon, when it rose 7.45% to 4.83 euros per share. Half an hour later, the CNMV decided to reimburse the contribution, which rose 23.8% and was inhibited at times. At closing it added 22.15%, to 5.9 euros per title.
- In any case, the Telepizza action did not reach the 6 euros offered by KKR. But the premium has been reduced to 1.7%. With respect to the price at which the CNMV suspended the quotation on Thursday, the one offered by KKR is 24% above.
- KKR was required to pay a premium of at least 22% with respect to the price at which the Telepizza securities were suspended. The venture capital fund bought 3% of Telepizza on May 17 at 5.9 euros per share. The law of opas obliges that, if a shareholder decides to launch an offer on a company, it does so at the higher price at which he bought shares in the last 12 months.