Some are skeptical that the Adevinta buyout offer of NOK115/share ($10.69 U.S./share) from a consortium led by investment companies Blackstone and Permira represents a good deal for smaller shareholders in the Oslo-headquartered marketplace operator.

Analysts at UBS Group AG argue that a deal at NOK135/share — 17.4% higher than the offer on the table — would still generate the desired return of the typical buyout. Indeed, on Sep. 1 — before the Blackstone and Permira-led consortium signaled its interest in Adevinta — Credit Swiss raised Adevinta’s target price from NOK117/share to NOK135/share.

Bloomberg columnist Chris Hughes observes that the fact that EBay and Schibsted (which control 60% of Adevinta’s equity between them) expressed strong support for the bid from the onset has hampered the target company’s ability to attract a competing offer.

Both EBay and Schibsted intend to roll over some of their holdings in Adevinta into the new entity, and Adevinta has wrangled an option for smaller shareholders to do the same — albeit to a lesser extent — from the bidders, Hughes notes. However, many public market investors are not allowed to hold unlisted stocks, limiting their ability to do this.

The “best and final” deal currently on the table is conditional on the acceptance of holders of 90% of shares in Adevinta. Once that level is reached, the shares of any holdouts can be forcibly purchased. If the bidders cannot reach 90%, they could lower the threshold and settle for a large majority position. However, they won’t want to do that because, without full control, financing the buyout will be more expensive.

“In such a scenario, both sides would be left second-guessing each other’s pain barrier. A game of chicken is possible here,” Hughes maintains. However, he adds that, in such a scenario, the power imbalance between the two sides means that the odds would be stacked against any recalcitrant small shareholders.

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