Navigating tricky markets

French medical diagnostics group Biomnis has been acquired by Duke Street in a €217m buyout backed by senior debt provided by Fortis and a mezzanine facility arranged by AXA.

Biomnis was founded over a century ago as Laboratoire Marcel Mérieux and provides analytical services to determine diseases as well as fertility treatment and other pathological services. It has annual revenues of €220m, handling five million tissue samples yearly.

As part of the deal, existing chief executive Jean-Louis Oger will become non-executive chairman. He will be replaced by Pierre-Yves Guiavarch, who currently works at major French healthcare group General de Sante. Earlier this year Duke Street took dental chain Oasis Healthcare private.

Elsewhere buyout houses CVC, PAI, Permira and Apax are interested in US$1.5bn Spanish support services business Clece, an airports logistics and cleaning subsidiary of Spain’s Actividades de Construcciones y Servicios (ACS). This is according to Spanish financial daily Expansion, which cited someone close to the negotiations.

Strategic buyer ISS of Denmark is also reported to be interested. The deal could value Clece at between €700m (US$1.5bn) and €800m. ACS announced in September that it was looking to offload some of its environmental services units.

Babcock & Brown appears to have fallen out with LIT, a co-investor in the Australian bank’s listed buyouts fund Babcock & Brown Capital Limited (BCM).

AIM-listed investment vehicle LIT has approached the independent directors of Eircom owner BCM with a non-binding indicative takeover proposal. Shares in BCM have fallen 67.5% over the past twelve months, from A$4.92 per share on October 30 2007 to A$1.6 per share on October 29 2008. BCM is majority-owned by Babcock & Brown.

The approach could see Eircom, BCM’s biggest investment and the Irish telecoms incumbent, change hands for a fifth time in less than a decade. BCM also owns Golden Pages Israel, a directories business. Eircom was recapitalised in 2006: at the end of June 2008 it had total debt of €3.922bn – a mixture of mainly senior debt, floating-rate notes and PIK notes.

LIT, which is an existing investor in BCM, is majority-controlled by funds managed by hedge fund Laxey Partners. LIT and funds managed by Laxey Partners hold approximately 6.7% of BCM.

In a statement LIT said it was considering whether to call for an EGM of BCM to ask shareholders to approve the appointment of three independent shareholder representatives to the BCM board.

According to LIT, this could ensure that agreement on an internalisation of BCM’s management contract with Babcock & Brown, which is currently under discussion, reflects what it calls the best interest of shareholders, and that a distribution of surplus cash is implemented as soon as practicable.

Prior to the LIT move BCM issued a statement saying directors were continuing to discuss the internalisation of management with Babcock & Brown and would conclude discussions by November 7, but that the board had deferred a decision on the optimal capital management programme.

The talks stem from wider problems in the Babcock & Brown group, where concerns about its financing model have massively undermined confidence in what was until recently a rapidly growing and acquisitive business.

At the BCM Board meeting on October 23 2008 directors were told that a small group of bondholders in Golden Pages Israel had requested a meeting to consider the early repayment of the bonds on issue in Golden Pages. Directors were told that the request would be resisted and that Golden Pages Israel was performing within its covenants. The total value of these bonds at June 30 2008 was NIS343m.

If BCM is in play, the Irish state will undoubtedly take an interest in any deal, particularly given widespread public concerns of a track record of underinvestment in Eircom networks under a series of owners since the business was first privatised. Many observers blame this for the country’s poor broadband roll-out.

Eircom last week appointed as its non-executive chairman Ned Sullivan, a former CEO of agrifoods business Glanbia, who is now chairman of foods and property group Greencore, chairman of building group McInerney and a non-executive director of Anglo Irish Bank.