SENNA

AUB Group Shares Tumble as EQT, CVC Abandon $3.8 Billion Takeover Bid

Sydney, Australia - Shares in Australian financial services firm AUB Group Ltd. plunged on Tuesday after private equity giants EQT and CVC Capital Partners abandoned their $3.8 billion takeover approach.

AUB, which provides insurance broking and risk services, said in a statement that the two private equity firms had decided not to proceed with their indicative, non-binding acquisition proposal of A$5.25 per share. The announcement sent AUB's stock down as much as 18% in early trading on the Australian Securities Exchange.

The failed takeover marks the latest high-profile deal collapse in Australia's mergers and acquisitions market, which has seen a number of major transactions falter in recent months amid volatile market conditions. Earlier this year, Canadian convenience store operator Alimentation Couche-Tard scrapped its $8.6 billion bid for petrol station owner Ampol.

"This is a disappointing outcome for AUB shareholders who were likely hoping for a substantial premium through a private equity buyout," said Mia Kwok, a senior analyst at a Sydney-based boutique investment firm. "It speaks to the challenges dealmakers are facing in the current environment of rising interest rates, inflationary pressures and uncertain economic outlook."

According to people familiar with the matter, EQT and CVC had been in advanced negotiations with AUB's board for several months. The private equity firms had conducted extensive due diligence and were finalizing the terms of a potential transaction before pulling out.

Industry sources said the collapse of the deal was partly attributable to the recent market volatility, which has made it increasingly difficult for buyout firms to finance large acquisitions. Debt markets have tightened substantially this year as central banks around the world hike interest rates to combat surging inflation.

AUB, which has a market capitalization of around A$1.8 billion, provides insurance broking, risk services and related advice to corporate and individual clients across Australia and New Zealand. The company has grown rapidly through a string of acquisitions in recent years, but its shares have tumbled nearly 30% so far in 2022 amid the broader market sell-off.