BC-backed VetPartners sees initial bids fall short of price expectations

Rachel Lewis , Ryan Gould , Josh O'Neill and Claude Risner
17 May 2023

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Initial bids for BC Partners-owned VetPartners have fallen short of the vendorтs price expectations, according to sources familiar with the matter.

London-headquartered BC had marked the asset significantly higher than where the indications of interest landed, in a clear demonstration of the ongoing valuation gap between buyers and sellers, said the sources. The UK-based vet chain has been one of the market's most hotly anticipated exits, tipped to achieve a valuation of up to GBP 3bn, as reported.

The offers were "opportunistic" but not "offensive" enough for the vendor to abandon negotiations entirely, one of the sources said.

BC is now narrowing down the offers it has received and deciding how to proceed, with no fixed timeline in place, this source said. The vendor is still assessing options, which could result in a full sale, sizeable minority stake sale or a refinancing – but a deal is unlikely to culminate in a continuation, they added.

The buyout group is also prepared to wait six months or longer for the return of improved market valuations, this source said, pointing out that large-cap funds will soon feel pressure to deploy capital to appease their limited partners.

BC received a "healthy" list of informal offers, this source said, though other sources noted that Blackstone, KKR, and Cinven Partners – previously touted as interested parties - are no longer pursuing the company.

However, a further source familiar with the situation said that BC continues to engage with all parties.

Partners Group, TPG, and PAI Partners were also expected to prepare bids in a JPMorgan and Jefferies-run process that pitched the asset off EBITDA in the region of GBP 150m-GBP 200m, as reported.

In contrast to pressures faced by other sellers, financing has proven to be less of a hurdle, said two of the sources, with incumbent lender Ares and sale adviser JP Morgan both providing multi-billion-pound staple financing packages to underwrite a deal.

The two lenders had been involved in some discussions, which would have seen Ares providing the senior debt and JP Morgan providing the junior, one of the sources added.

BC Partners, JP Morgan, Jefferies, Blackstone, KKR and Cinven declined to comment.