Wednesday, 10 September 2014

The auction of the auctioneer

It's a bit quiet in the world of public company M&A in the London market so I thought I would write a quick post on the auctioneer Bonhams following my piece in the Mail on Sunday last month.

For readers unfamiliar with the situation, the owners of Bonhams have reportedly hired bankers from Greenhill to carry out a strategic review (i.e. sale) of the 200-year old auctioneer.

I wrote in the Mail on Sunday last month that Poly Culture, China's largest auction house, had emerged as one of the front runners to buy Bonhams after several private equity bidders, such as CVC and Bridgepoint, withdrew from the auction process. Here is a link to the Mail on Sunday piece:

However, I now have a reliable source who tells me Poly Culture has actually dropped out of the race for Bonhams.

In part, this is because the owners of Bonhams are said to want £350m for the business whilst bidders are believed to only be willing to pay between £250m and £275m, according to my source.

My source also claimed to me that Bonhams doesn't fit within Poly Culture's strategy. Poly Culture never returned calls seeking comment.

It's worth bearing in mind, though, that sometimes bidders re-enter auction processes once they have dropped out.

Indeed, during my career as an M&A reporter for The Daily Telegraph I saw several companies "drop out" of auctions only to re-enter at later date and take the price. This happened, for example, when Pearson bought deals database in 2006 for £150m or so.

And Chinese companies that are not well versed in western M&A techniques often take a lot longer to complete takeovers of European businesses.

So, I wouldn't be altogether too surprised to see Poly Culture re-emerge in this auction process.

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