Soros Private Equity Partners, the investment business of Mr George Soros, has had talks with the US private equity house Madison Dearborn to explore joining its bid for Jefferson Smurfit Group, according to a weekend report.
With developments on the Madison Dearborn bid expected within weeks, Smurfit shares closed two cents weaker last Friday at €3.12 with more that six million shares traded.
There has been heavy hedge fund and arbitrage trading in the shares since the Madison approach was announced.
Because Madison Dearborn would struggle to raise the full funds required for a bid on its own, the Chicago-based private equity firm has been talking to the Soros firm about a joint bid, according to the Sunday Times. Soros and Madison have already worked on several investment projects together and have a close relationship, according to the report.
Smurfit shares were trading around €2.60 to €2.70 before the approach was revealed. Analysts expect any bidder to offer shareholders more than €3.5 for their shares. Institutional investors have told The Irish Times they would not support a leveraged buy-out at €3.50 per share. They said Madison Dearborn would have to pay significantly more than that.
Madison is at an advanced stage of discussions on the terms and conditions of any bid with an independent board committee respresenting Jefferson Smurfit.
The commitee is headed by the group's senior independent director Mr Martin Rafferty. Its members are former chief operating officer Mr Howard Kilroy and former Eircom chairmam Mr Ray McSharry.
The Madison approach is conditional on several factors including the continued participation of the Smurfit management team. It is understood that group chairman Dr Michael Smurfit and other members of his family and a number of other senior executives - including chief executive Mr Gary McGann - will be an integral part of any leveraged buy-out.
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