Cinven has locked Spice into exclusive discussions with a hefty break fee, meaning the prospect of an expensive bidding war with a mystery third party has receded.
Spice has agreed not to seek out any rival offers.
Cinven’s dealmakers and its advisers are in the final stage of conducting due diligence on the Yorkshire-based installer of water meters, which counts British Airways and Starbucks among its customers.
Although Cinven is keen to spend more time scrutinising Spice’s contracts, sources said it expects to make a concrete offer before the exclusivity period runs out on 27 September.
Chief executive Martin Towers and finance director Oliver Lightowlers are tipped to stay at the helm if a deal goes through. Towers replaced major shareholder Simon Rigby as boss following a profit warning in December, and proceeded to offload Spice’s loss-making gas and telecoms businesses.
Shares in Spice closed up 5.9 per cent at 67p as investors placed their bets on a recommendation of the 70p-per-share offer, which is Cinven’s third punt after two earlier attempts were knocked back by the Spice board.
BOUTIQUE investment banking outfit Hawkpoint Partners has been at Spice’s side as it has played hard-to-get with Cinven.
Vice chairman Christopher Kemball and managing director Chris Robinson are Hawkpoint’s lead advisers on the deal, helped by Serge Rissi. Kemball’s CV includes stints at ING Barings, where he was global head of emerging markets corporate finance, Dillon Read, where he was managing director, and Kleinwort Benson. Robinson joined Hawkpoint from Lloyds Merchant Bank and previously worked at Deloitte Ross Tomatsu.
On the opposing side for Cinven are Charlie Batten of Investec and Stephen Georgiadis of Altium Capital. Batten joined Investec from Dresdner Kleinwort after the German bank decided to pull out of the UK?corporate arena. Georgiadis has a wealth of experience in cross-border merger & acquisition projects and debt financings, having begun his career at Hill Samuel & Co in 1983 before moving to Apax Partners in 1985. He started at Altium in 1990.
The wrangle between the two companies is reaching a conclusion after months of manoeuvring. Spice dismissed indicative offers of 56p per share and between 62p and 65p per share before relenting at 70p.