Caverion minority shareholders cautious on rival bid upside as Bain mulls options

Triton last week reduced the acceptance condition on its EUR 8.95 per share offer for Caverion from 90% to two-thirds of the target's share capital, overcoming a key hurdle to completion.

Caverion's board expects to withdraw its backing for Bain's bid in favour of Triton's unless it improves the offer by a 4 April deadline, it said last week. Bain has said it is considering its options and will announce its next steps in due course.

But Bain would probably already have upped its bid if it planned to do so, the first shareholder said. Even if Bain planned to increase its offer, Caverion is unlikely to fetch more than EUR 9 per share, another shareholder said.

Stockholm-based real estate service provider Bravida is seen as Caverion's closest comparable, all three of the shareholders agreed. Triton's offer of EUR 8.95 per share values Caverion at a 2022 EV/EBITA multiple of 14.2x, slightly below the 14.8x at which Bravida trades, according to calculations by this news service.

Caverion might struggle to justify offers much higher than Triton's current bid because Bravida has historically delivered more stable financial performance and generates better margins, one of the shareholders said. An EUR 8.95 per share offer is a fair one for the business when taking into consideration that Caverion is still in need of a turnaround of some parts of its financial performance, the second shareholder added.

The macro environment also needs to be considered, the third shareholder said. "The business is currently in a good cycle with good long term prospects, why wait until the next disaster?"

Caverion's shares were trading at EUR 4.69 before Bain made its initial approach of EUR 7 per share in November last year. The two financial sponsors have been trading bids since then with Triton's latest, EUR 8.95 per share offer representing a 91% premium to the target's pre-announcement share price.

Triton's decision to drop its acceptance criteria means the deal could no longer be blocked by the Bain consortium, which controls 27% of the target's share capital.

Bain has offered shareholders the option of EUR 8 per share in cash or a debt instrument worth EUR 8.50 per share.

Financing for the deal is not impacted by ongoing turmoil in financial markets because financing arrangements are binding, according to a source close to the situation.

As of late afternoon on Monday (27 March), Caverion traded at EUR 8.74 for a EUR 1.24bn market cap.

Triton Partners declined to comment. Caverion and Bain did not respond to a request for comment.

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