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Zooplus endgame may not be total dog’s breakfast

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LONDON, Oct 25 (Reuters Breakingviews) - A peculiar transatlantic clash of the buyout titans may be winding down. Sweden’s EQT (EQTAB.ST) and U.S. private equity group Hellman & Friedman are going halves in their pursuit of German petfood supplier Zooplus (ZO1G.DE). Each side will now write half of an overall 3.7 billion euro equity check, instead of the whole thing.

Zooplus will be wagging its tail – the 480 euro-per-share offer is a 73% premium to where its shares traded in early August. The buyout barons should feel more relieved than ecstatic. Unlike most private equity deals they’re applying no leverage, so everything depends on far-from-guaranteed rapid revenue growth. The likely internal rate of return looks less than 15% .

Still, the lack of a German put-up-or-shut-up regime means the bidding could have got sillier still, either landing one bidder with an even ropier prospect, or Zooplus with a crashed share price if both withdrew. With vertiginous buyout premiums currently in vogue read more , this sort of hatchet-burying may become more common. (By George Hay).

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Editing by Liam Proud and Karen Kwok

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