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EQT Takes Upper Hand in Bidding War With H&F For Zooplus

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(Bloomberg) -- Swedish private equity firm EQT AB offered to acquire German online pet-food retailer Zooplus AG for 470 euros a share, topping an offer by Hellman & Friedman.

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Zooplus welcomed the bid, giving EQT the upper hand in the takeover fight with H&F. EQT’s proposal, made through a holding company called Pet Bidco GmbH, valued Zooplus at 3.36 billion euros ($3.94 billion) and was 10 euros-a-share higher than H&F’s last offer. The EQT bid was also 0.9% higher than Friday’s closing price.

EQT and Zooplus have signed an agreement in which the private equity company committed to supporting considerable growth investments. The deal needs the approval of more than 50% of Zooplus shareholders, and is subject to other regulatory considerations.

Earlier this month H&F boosted its bid for the pet food retailer by 18% to 460 euros a share after Zooplus confirmed Bloomberg reports that it was in talks with buyout firms KKR & Co. and EQT about counteroffers to H&F’s initial bid. KKR then ended talks over a possible offer, but EQT stayed in the hunt.

EQT has done deals in the pet industry before, building up a chain of veterinary care practices under the IVC Evidensia moniker.

Having three prominent buyout houses competing for a publicly-listed firm is a rarity in Germany. The EQT offer comes at a time when the Swedish firm is grappling with a probe by regulators over possible market abuse.

Peak Cycle

The bidding war for S-DAX listed Zooplus is yet another sign that high valuations aren’t deterring some private equity houses from paying up for targets as they sit on record amounts of unspent capital commitments from their limited partners. Higher prices mean that future returns are harder to come by.

Hellman & Friedman, led by Patrick Healy, recently raised one of the biggest-ever buyout funds with $24.4 billion. Alternative asset manager EQT has become one of the most-active European private-equity houses working on some of the biggest buyouts on the continent in recent years including Nestle Skin Health.

Low rates and high returns have prompted limited partners -- pension funds, insurers -- to allocate more money to private equity in search of yield, spurring the most buyout-led acquisitions in Europe in the first half of the year in over a decade. The pet-care market has surged in the last two years as stay-at-home workers adopt furry friends, according to figures from Euromonitor.

Euromonitor predicts 7% growth in the global pet-care market through 2026 as online transactions boost sales. The industry was already benefiting as dog and cat owners looked for more premium products and the convenience of online deliveries.

(Background added throughout)

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