eBay started the auction process in late February, proceeding with the sale despite the pandemic potentially crimping the availability of finance for sponsor-backed or highly leveraged bids. Possible buyers included KKR-backed Axel Springer, South African group Naspers, which owns Prosus Classifieds, and private equity consortia including Blackstone, Hellman & Friedman, and Permira. TPG was also linked to a possible bid.
Norwegian firm Adevinta, 60% owned by Denmark’s Schribsted, was the winning bidder, with total consideration of $9.2bn-equivalent. The auction had been trailed in February as an approximately $10bn sale process.
Adevinta, a smaller classifieds operation listed in Oslo, structured the bid to include $2.5bn of cash, and a 44% stake for eBay in the combined business. Schribsted, Adevinta’s parent, will acquire the Danish unit of eBay Classifieds for $330m, cutting the cash Adevinta has to raise in the market.
Backing the deal was a $3bn bridge, which would refinance Adevinta’s outstanding debt as well as paying for the cash portion of the acquisition. The company is also rolling over its €400m revolver into the new capital structure.
The deal is one of just a few large cap new money buyouts likely to hit the market before year-end, as the pandemic discouraged some management teams from selling assets into an uncertain market, and travel restrictions hindered due diligence work.
Citi, which was financial adviser to Adevinta, and Barclays, financial adviser to Schribsted, are joint global co-ordinators on the loan portion of the acquisition financing, with both banks physical bookrunners on the euros and Barclays solo on the dollars.
The intended split in the loan is €900m and $500m, with the bond portion of the financing yet to be announced. Cross-border LBOs in multiple currencies are usually adjusted, with each pocket of potential demand sized to maximise price tension during bookbuilding.
BNP Paribas, DNB Markets and JP Morgan are joint bookrunners with Bank of America and ING as mandated lead arrangers. Goldman Sachs and LionTree advised eBay on the sale.
An obvious corporate comparable will be AutoScout24, the German car classifieds business bought by Hellman & Friedman, and financed earlier this year with just over €1bn of leveraged loans, split into first and second lien portions.
But the AutoScout deal, priced originally at 325bp and par and now trading around a price of 97, was much more levered than Adevinta’s proposal — Moody’s saw opening leverage at 11 times through the second lien on AutoScout, compared with around 6 times for Adevinta.
The rating agency has assigned a Ba3 rating to Adevinta’s loan, a rarity among LBOs, which are usually structured to achieve a single-B rating. This likely reflects Adevinta’s status as a strategic buyer intending to maintain its listing and paying part of the cost in shares, rather than a sponsor attempting to cut its equity contribution to the minimum.
A double B-rating, however, ought to generate robust interest among CLO buyers under pressure to maintain their weighted average rating factor (WARF) limits, which have been hit hard this year by the wave of coronavirus downgrades.