Purmo to end up with Grand Bidco, against our expectations

Translation: Original comment published in Finnish on 8/1/2024 at 8:45 am EEST.

Purmo announced that, based on preliminary results, more than 90% of its shareholders have accepted the tender offer made by the Grand Bidco consortium. Shortly before, Haier, a competing bidder and higher bidder than Grand Bidco, announced its withdrawal from the bidding war. According to Haier, certain conditions of the offer were not met, as Purmo's two largest major owners and the company's board of directors supported Grand Bidco's offer despite Haier's higher offer price. 

Based on preliminary results, Grand Bidco has received more than 90% of the shares

The offeror will announce the final result around August 2. However, based on the preliminary results, Purmo is about to end up with Grand Bidco, as it appears that shareholders representing 93.2% of the shares have accepted the offer or otherwise agreed to sell their shares to Grand Bidco. The promised consideration for the listed C-shares under the provisionally accepted offer is EUR 11.06, slightly higher than the last closing price (EUR 11.0).

We believed that Purmo would end up with Haier, which made a higher offer. In our view, the risk highlighted by Purmo's board that the Haier transaction would not be completed until 6 months later seemed much smaller than the additional return on the tender offer (23% higher compared to Grand Bidco). We therefore continue to question the board's decision to support Grand Bidco's offer, which made it difficult for Haier, which had shown a credible interest in Purmo, to proceed with its higher offer. We will update our views on Purmo in the coming days.