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Internet auction website Trade Me is negotiating with global private equity firm Apax Partners over a 100%, $2.54billion takeover offer.
Apax's $6.40 per share offer, for Trade Me's 396.9million shares, is a 25.4% premium on its opening trading price of $5.10 yesterday which then leapt 19% to a high of $6.10, before trading back down to $5.93.
London-based Apax, one of the largest private equity companies in the world, has diverse investments, including in telcos and technology, business and financial services, and the consumer and retail industry.
In a market update on the NZX, dual-listed Trade Me said it had received a preliminary, non-binding, indicative proposal from Apax Partners to acquire 100% of its shares, subject to conditions which include the completion of due diligence.
''The board of Trade Me, together with its advisers, has reviewed the indicative proposal and has decided to engage with Apax,'' the company said.
While Apax has exclusive due diligence access until December 12, that was subject to Trade Me retaining the ability to engage with any third party that comes forward with an unsolicited proposal.
For its year to June, Trade Me revenue hit $250million and it booked a 3.9% increase in after-tax profit, of $96.6million.
Apax's website said it typically invested in companies valued between 1billion and 5billion ($NZ1.6billion and $NZ8.3billion), and at the end of 2016, its portfolio of companies had combined revenue of $US21billion ($NZ30.9billion).
Forsyth Barr broker Lyn Howe said she could understand Trade Me's appeal to Apax, given its leading online position in New Zealand, generation of strong free cash flow and low debt gearing on its balance sheet.
She said while a takeover would require Overseas Investment Office approval, she did not see any ''regulatory roadblocks'' as long as Apax passed the ''good character'' test.
Craigs Investment Partners broker Peter McIntyre said the offer ''was a surprise'', but Trade Me's cash flow, dominant market presence and scale would have been attractive to Apax.
''There's a lot of potential at present for cash-rich companies to come here,'' Mr McIntyre said, citing the sales of Orion Health to British interests and SLI Systems to a Texan tech investment company.
He said the 25% premium in the offer was in line with the about 26% average premium paid in other successful takeovers on the NZX over the past decade.
Other Apax investments include Israel-based Global-e Online, which provides cross-border e-commerce solutions; Genius Sports, a British-based sports data company; and SoYoung, the largest online marketplace for aesthetic medical treatments in China.
It also has MatchesFashion.com and Moda Operandi: British online retailers of luxury goods and fashion, respectively, BusinessDesk reported.