December 11, 2018 / 8:22 PM / 2 years ago

NZ's Trade Me backs offer from UK firm, shares hit new record high

WELLINGTON (Reuters) - New Zealand’s top online marketplace Trade Me Group TME.NZ is set to be acquired by private equity investor Apax for NZ$2.56 billion ($1.8 billion) after the British firm matched a rival offer.

Trade Me said on Wednesday it had entered an agreement with London-based Apax Partners, after the firm lifted its offer to NZ$6.45 per share, from NZ$6.40 in November, to match a competing bid by California-based Hellman & Friedman.

“After careful consideration, the board has unanimously concluded that this (Apax) offer is consistent with our efforts to deliver maximum value for shareholders,” Chairman David Kirk said in a statement to the stock exchange, adding the deal would need shareholder and court approval.

Shares in Trade Me jumped 4 percent to a record high of NZ$6.38 after the announcement.

Though welcome news for investors, a buy-out would be a loss for the New Zealand stock market, which faces yet another de-listing of a major company after a dearth of listings and the shift of star player Xero (XRO.AX) to the Australian stock exchange earlier in the year.

“It’s not good news for the NZX itself ... it’s very, very disappointing for the local market,” said Grant Williamson, director of Christchurch-based investment advisor firm Hamilton Hindin Greene.

Trade Me shareholders however would be pleased with the offer, he added.

“It is a very attractive price given where current market conditions are, which is quite weak,” he said.

The NZX's benchmark index .NZ50 has fallen almost 7 percent since September, in part due to global trade jitters.

Australia and New Zealand have seen a flurry of deals this year as private-equity firms are attracted by their stable and advanced economies amid a global financial market rout, as well as opportunities to buy affordable dominant players in relatively small markets.

Trade Me launched in 1999 with 15 staff. It now has more than 600 employees and says it has the most customers among online classified advertising platforms in New Zealand.

In the absence of a higher proposal, Trade Me’s board recommended that shareholders back the Apax offer, which is also subject to approval from New Zealand courts and the foreign investment regulator.

Hellman & Friedman did not immediately respond to a request for comment.

Under the agreement, Trade Me may have to pay a “break fee” of NZ$19.2 million to Apax if it walks away from the deal.

Trade Me said the deal represented an enterprise value of NZ$2.74 billion.

Reporting by Charlotte Greenfield in Wellington and by Devika Syamnath in Bengaluru; Editing by Edmund Blair and Stephen Coates

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