EUR 850.00 For Business Accounts Only

Morningstar | Corporate Action: We Recommend Trade Me Shareholders Vote for the Apax Acquisition

We recommend Trade Me shareholders vote in favour of the acquisition of Trade Me by Apax Partners at the Scheme meeting on April 3, 2019. Specifically, the proposal involves the acquisition of Trade Me by Titan AcquisitionCo New Zealand Limited, a New Zealand company owned by the Apax IX Fund which is advised by private equity firm Apax Partners. The offer price of NZD 6.45 in cash implies a fiscal 2019 P/E multiple of 24 and is greater than both the independent adviser’s valuation range for Trade Me of NZD 5.93 to 6.39 per share, and our stand-alone valuation of NZD 5.00. The Apax offer is about 27% above the pre-offer share price and we expect the share price would fall significantly in the short term if the acquisition didn’t proceed. The Scheme requires the support of at least 75% of votes cast and 50% of shares outstanding to proceed. We maintain our fair value estimate at the Apax offer price of NZD 6.45 on the basis the offer has a very high probability of succeeding.

The offer has been recommended by Trade Me’s board of directors and the independent adviser, Grant Samuel. We don’t expect any other offers to emerge at this stage of the process, and previous bidder Hellman & Friedman has withdrawn its NZD 6.45 per share offer. CEO Jon Macdonald’s long planned resignation also increases the chances of the transaction proceeding. At the current market price of NZD 6.41, the share price is only 0.6% below the offer price and some investors may prefer to sell on market to remove the opportunity cost and risk associated with waiting for the offer to proceed. However, shareholders are likely to be paid on May 8, 2019 and will incur no brokerage fees by waiting for the deal to complete.