Merger Market
Talks for the takeover of Saft Groupe’s [EPA:SAFT] by Total [EPA:FP] came as a result of direct negotiations, said a person familiar and two sources briefed on the matter.
Saft did not run a sale process, they said, arguing that the target’s strong financial health meant it did not need to sell.
Executives at the companies began preliminary discussions on the industrial logic of a combination a few weeks ago, the person and first source said. The board recently decided to recommend the offer to shareholders based on the proposed 38% premium and the opportunity to have Total’s financial backing to invest in innovation, the person added.
It is unclear if other industry players will register interest in Saft following the deal announcement, the person and first source said.
The deal values Saft at a full multiple likely to please shareholders, they said. The companies valued the tender offer at approximately 9x EBITDA in their joint news release. Few bidders would be eager to engage in a potential bidding war with a deep-pocketed rival like Total, the person noted.
Synergies from Saft’s battery operations and Total are likely to be focused on the commercial and marketing areas, the person added. Many of Saft’s industrial customers outside of energy might have a stronger strategic logic to integrate their supplier, the first source and person said.
The French oil major yesterday (9 May) announced plans to launch a friendly tender offer for Saft shares valuing the industrial battery producer at EUR 950m excluding debt. The deal is expected to catalyze Total’s renewables growth and build on its 2011 acquisition of a majority stake in solar panel maker SunPower [NASDAQ:SPWR] for USD 1.3bn.
Timing for the tender offer’s launch is being driven by French financial markets’ regulator the AMF’s review process, the person said. The person estimated the launch could occur in coming weeks, ahead of summer. The offer, which was submitted to the AMF on 9 May, is expected to open on 2 June and close on 19 July, according to the indicative timetable.
The offer also needs to be notified to the relevant authorities in the European Union, the US, Russia and a few other jurisdictions, the offer document stated. However, the decision of these authorities does not constitute a condition precedent of the closing, the document said.
Spokespeople for Saft and Total declined to comment.