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AXA's Spotless sale points to return of competitive auction

  • Francois Rowell
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In the last year the competitive auction has become a rarity, as buyers became unwilling to bid up prices and sought extensive exclusivity. Now, though, they could be back on the cards.


In the last year the competitive auction has become a rarity, as buyers became unwilling to bid up prices and sought extensive exclusivity. Now, though, they could be back on the cards. By Francois Rowell
AXA Private Equity sold portfolio company Spotless, a cleaning products producer and distributor, to BC Partners in a deal that could value the business at around to €600m having put the company on the block a second time. The move is significant not just due to the hefty price tag, but because the sale was conducted as a competitive auction, a process that has been largely absent from the market in the last two years.
Interestingly, Spotless has been a good gauge for the fortunes of competitive auctions over the last 18 months. AXA had initially attempted to sell the group through an auction at the end of 2008, but withdrew the company after offers fell well short of the target price. Instead, the investor opted to increase its shareholding to 66% and bide its time.
This latest auction was run by Lazard, and saw BC Partners hold off bids from Lion Capital and Bridgepoint. The sale is still subject antitrust approval and final banking documentation.
So, are these sales processes, which are commonly accused as being part of the reason for the spiraling valuations during the years of excess, making a comeback? Some certainly think so. "The auction is definitely back for certain transactions. Successful companies in strong sectors have always been in high demand," confirms one corporate financier.
But the news of the return of the auction could be met distain by a number of private equity groups keen to avoid the bidding frenzy.
During 2009, a majority of GPs were forced into sourcing proprietary deal flow to find a quality deals at affordable prices; granted a more time consuming approach with long exclusivity periods, but a way to ensure prices were reasonable and affordable.
But while private equity buyers might not be as keen to see the return of the auction process, sellers are obviously considering the process as an exit option.

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