The attempt by a consortium led by investment companies Permira and Blackstone to acquire Adevinta is “the latest test of whether minority shareholders can avoid being harmed by alliances between private equity and larger fellow investors,” according to Bloomberg columnist Chris Hughes. 

He goes on to argue that small shareholders in the Norway-based marketplaces operator are caught between a bidder and dominant investors (EBay and Schibsted) supporting the buyer. Hughes says that EBay and Schibsted “[don’t] appear to be putting up much resistance” to the offer. 

While some analysts have asserted a price of NOK115 ($10.50 U.S.) per share would represent a respectable premium of more than 40% on the company’s pre-bid share price, Hughes maintains that this figure is “deceptively large,” as Adevinta has been significantly underperforming such peers as U.K.-based AutoTrader and Rightmove and Germany-based Scout24 in terms of profit margin.

He adds that a lack of liquidity on the relatively small Oslo Stock Exchange is a factor in this. At the time writing, Adevinta’s share price stood at just under NOK110. 

Hughes concludes that Adevinta represents a “cracking” opportunity for private equity if its profit margin can be raised closer to the level of its peers. 

The relatively low valuation of Adevinta also reflects wider market conditions. Amid rising interest rates and uncertain economic prospects, 2023 may be the year of the “steal” in marketplaces.

Already this year, Naspers subsidiary Prosus has disposed of marketplace sites in India and Turkey at fire sale prices. For its assets in some Latin American markets — Argentina, Colombia and Mexico — the company couldn’t find buyers at all and simply shuttered the businesses. 

Print Friendly, PDF & Email

Related Articles