Candover terminates takeover talks

Beleaguered buyout house Candover has announced that it has ceased all discussions relating to the takeover of its business, stating that the approaches received did not offer sufficient value to shareholders.

The firm announced that recent actions to stabilise the company's financial position, which include the £553m sale of Wood Mackenzie, the withdrawal of commitment to the 2008 fund and the closure of Candover Asia and Eastern Europe, should mean that it will be in compliance with the covenants on its debt. It also expects to be able to honour all follow-on commitments to its 2005 fund.

The board of directors therefore felt that it was not in the interests of shareholders to pursue acquisition talks at this time.

However, the longer term future of the buyout house remains in doubt. Having reneged on its commitment, Candover's new fund is currently suspended, with talks ongoing with LPs to decide whether the vehicle will still be raised. This will largely be dependent on whether the firm can generate sufficient value from its current portfolio companies to make a convincing argument to investors.

But with the majority of assets being acquired at the height of the boom with large leverage packages, many of the investments will be under water and it is likely to be hard work generating any returns, let alone attractive returns.

Candover chairman Gerry Grimstone has not ruled out revisiting a full takeover of the business at a later date, stating in a press release that the directors are "continuing to review whether an alternative ownership structure for Candover may be merited in the future".

For now though, the firm will effectively wind down. It has successfully managed to buy itself some time, and a few lucrative divestments can very easily change people's perception.

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