$5 Billion? No Thanks

Scout24 offer

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What's going on?

Shares of Scout24 – Germany’s answer to listings sites like Autotrader and Zillow – rose on Monday after the company rejected a $5 billion takeover offer.

What does this mean?

Private equity investors Hellman & Friedman and Blackstone originally bought Scout24 in 2014, listing its shares on the German stock market a year later. But now they fancy another turn at the tiller. A joint takeover offer late last week valued Scout24 at just 8% more than its share price – which the company rejected as inadequate. Potential buyers usually have to offer a nice premium to entice existing investors to sell, and it looks like 8% wasn’t enough.

Why should I care?

For markets: I Scout a bidding war.

Hellman and Blackstone may well now return with a higher offer. Or else other suitors – perhaps Silver Lake, which bought Zoopla (the UK version of Zillow) last year – could jump in and spark a bidding war, which would be good news for Scout24’s shareholders. The platform is attractive to investors for a number of reasons: it has low, stable costs, and the buyers and sellers of its houses and cars supply their own listings, not to mention the goods themselves (meaning Scout24 doesn’t have to maintain any sort of inventory). Once it becomes the leading platform in a region, and the first place buyers and sellers look, Scout24’s owners can look forward to a high profit margin and a steady flow of cash.

The bigger picture: Brisk business for platformers.

Food delivery service Just Eat announced on Monday that its anticipated sales and profit for 2018 were both ahead of what investors were expecting. The company also chopped its CEO after just 16 months – he’d come under pressure for not delivering enough. But the takeout trade is a competitive game, and Just Eat’s battling the likes of Deliveroo and Uber Eats for hungry customers.

Originally posted as part of the Finimize daily email.

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