The biggest deal in the last few days has been a non-deal – that is, of course, the failed takeover tilt for David Jones.
The circumstances surrounding the David Jones takeover have been frankly pretty amusing. A mysterious bidder with no history, no management team and seemingly little financial firepower to back up a $1.6 billion bid – it seems amazing that David Jones itself couldn’t figure out that this was hardly a serious bid.
David Jones might be back on the official list of “beleaguered retailers” but don’t be put off by the failure of this bid – there are plenty of smaller deals being done just outside the big leagues.
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Indeed, we saw two good examples yesterday.
Health and pharmaceuticals maker Blackmores pounced on supplements maker FIT-BioCeuticals in a deal worth $40 million.
It would appear to be a straightforward family business exit. BioCeuticals was founded 19 years ago by entrepreneur Michael Hall and his two sons and sells supplements to the medical practitioner markets through its key brands BioCeuticals and IsoWhey.
The company’s 100 staff will shift across to Blackmores, who will continue to operate from their base in the Sydney suburb of Alexandria.
In the financial services sector, Macquarie Banking and Financial Services sold part of its financial planning software group Coin to Rubik Financial Group for a tick under $24 million.
The deal would appear to be a smart move for both parties. Rubik has been hunting for a bolt-on acquisition for some time and Macquarie Group has engineered the deal in such a way that it retains some exposure to Coin – Rubik gets the part of the business servicing institutional clients, while Macquarie gets to retain its boutique clients.
These deals follow a slew of takeovers in the last two weeks, including News Limited buying publisher Australian Independent Business Media, as well as APN News and Media buying a big chunk of online retailer BrandsExclusive for $36 million.
There are a range of motivations behind these deals.
The sellers are generally looking to get big (that is, join a larger group with more scale and financial firepower) or get out (that is, execute an orderly exit).
The buyers are generally looking to grow their existing, mature business, or diversify their earnings by entering low-cost areas.
SMEs are perhaps best placed to capitalise on this mini deal rush. While market caution means big deals are much harder to get away, these smaller buys around that $20-50 million mark are much more manageable, much more affordable and much easier to sell to investors.
SMEs that are looking to exit will clearly need to be realistic about asset prices – which clearly ain’t what they were a few years ago – but if they can be sale ready and find the right buyer, deals are there to be done.
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