I follow M&A and understand the process. What you may have read were analysts potential takeout projections. This afternoons bloomberg article mentions no price ranges. My best guess is between $75 to $78 maximum. PE firms have a long history of never paying high control premiums. Strategic competitors generally pay more to keep the PE firms at bay and win the bid. The exclusive talks will be a one on one with ICUI, so no outside influences for any bidding up the price, just old fashion sales and marketing by PE firm for BOD to accept their offer with some mgt buyout sweetners. So in essence PE isolated any strategic competitors in the final process.
What do you think the final control premium (percentage gain since news leaked) should be?
I agree with you on ICUI being a good company and the sales process they have gone through. Yes, GTCR was selected and now are negotiating the final details including price. PE guys are known as financial sponsors (numbers guys) and when they take a company private they borrow money (LBO) to do so which adds debt to the business. The cash flow from the business needs to be able to pay for the debt service. If they overpay, the banks will not loan to them without requiring a larger down payment. The ultimate goal of a PE firm is to make improvements to the business and it must be self sustaining. After about 3 to 5 years ICUI could be offered as an IPO or sold to another PE firm or a competitor and this is when the PE firms actually make their profit on the down payment they used for the original loans.
The stock price spike you saw today does not dictate how much a PE firm is willing to pay. Take a look at the long wick above the white body of the candlestick at about 3:50PM.
The closest industry comparable I can think of is LIFE technologies. If you recall LIFE was acquired by TMO on 4-15-13 for $76 cash or about $13.6b, at a 38% control premium. TMO is a strategic competitor not a PE firm. LIFE is also much larger in size than ICUI.
LIFE was taken out for 12.58x EBITDA and 3.52x sales.
Take a look at yahoo / finance / key stats and compare LIFE with ICUI numbers.
A 38% control premium for ICUI would be approx. $84. Does ICUI warrant the same premium? I dont see a PE firm paying that much. I will stick with my upper range number to be conservative.
Good luck to us both and lets compare notes if a deal gets done.
ICUI founder, management and major holders would not pick PE without thinking carefully about the financial benefits.
There were more bids came in and they selected GTCR. Who said that the bidding did not occur? Also just an example, Ackman, Icahn, Soros were willing to pay big bucks to pay for companies.
Quality in medical devices and biotech companies have great future globally. Baby boomers, more people can afford care, etc...ICUI is a quality company.
I am not an expert in finance. I worked with companies in ten same field with ICUI in the pass. We acquired a number of companies in the past. When we saw a business that fit with our strategy, we were willing to pay. So I can only guess. People were willing for $85 today so it will be $85 $90.
BREAKING:$ICUI is in exclusive talks to sell itself to private equity firm GTCR, sources told Bloomberg.
GTCR will not pay as much as a strategic buyer would pay. If ICUI is locked into talks there is no competitors to keep the bidding going. You may have to lower your expectations on a potential takeout price. My best guess is $75.00
Those guys at motley are something else.
Yes, they agreed that ICUI will be acquired. Well, when you evaluate a great company for acquisition, you DO NOT use fair price as it stands alone.
Hurry and announce the acquisition. Thee Motley and SA guys are like bugs musquitos everywhere...SEC need to set some rules for them.