Bapcor has disclosed a conditional indicative offer from Bain Capital at $5.40 per share, a 23% premium to the 1-month VWAP. We expect the Board will view the offer as opportunistic and may not even allow due diligence at the prevailing offer price. Bapcor’s EBITDA margins are well below US peers and its own aspirations under the Better Than Before program. While Bapcor’s realisation of cost savings has clearly been delayed, the company still believes in the long-term potential for better profit margins. We place a 25% probability of a takeover proceeding for Bapcor. A successful takeover offer will require a price over $6.00 per share in our view and Board support.

We are ceasing coverage of Costa Group Ltd (CGC.AX) due to a private equity takeover by Paine Schwarz Consortium. The shares will be suspended from trading at the close of market on Thursday 8 of February 2024. The Scheme of Arrangement will be implemented on 26 February 2024.