Andrea Orcel sends Germany into a frenzy

One job move to start: Private equity group Madison Dearborn Partners has named Vahe Dombalagian as its next leader. He recently led the firm’s sale of insurance brokerage NFP for $13.4bn in its biggest-ever windfall. Dombalagian will take the reins from Tom Souleles and Tim Sullivan, who will become vice-chairs, according to a memo seen by DD. The group, which oversees $31bn in assets, has also promoted eight partners as part of the sooner than expected succession plan.

Andrea Orcel doubles down on Commerzbank

Making an approach to take over a bank headquartered in another country is bold in and of itself. But blindsiding the host country by covertly building up a sizeable stake is an entirely different breed of boldness.

The approach in question is UniCredit’s recent push to buy up shares in Commerzbank, with the most recent escalation bringing the Italian lender’s stake up from about 9 per cent to 21 per cent.

The man behind it all is Andrea Orcel, the bank dealmaker turned UniCredit chief executive, whose ambitions evidently stretch far beyond Italy.

While Orcel previously said he wouldn’t pursue a tie-up without the German government’s support, he’s not showing any signs of slowing down even as resistance mounts.

The Italian bank has submitted a request to the European Central Bank to raise its interest to nearly 30 per cent — but that process can take months.

Germany’s stance against a possible union only hardened further after news arose of UniCredit’s larger stake.

A government official told the FT that Berlin “supports the strategy of Commerzbank which is geared towards independence”, stressing that “we do not support a takeover, and we have informed UniCredit about this”.

Even German Chancellor Olaf Scholz made his displeasure known. He told Reuters that “unfriendly attacks [and] hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself”.

But what exactly can Germany do about the approach? Without other suitors clamouring to bid on the lender, blocking a deal on ideological grounds could be difficult, Lex writes.

While hostile bids for banks are incredibly rare, they do happen. In fact, a hostile takeover playing out between Spanish lender BBVA and its domestic rival Banco Sabadell seems likely to go ahead.

As Europe confronts a potential wave of consolidation among its fragmented banks, could hostile bids become the norm?

REA looks for the Rightmove

Just as Rupert Murdoch and his children are locked in a succession battle in a Nevada courtroom, part of the media tycoon’s empire is engaged in a different sort of takeover fight.

REA, an Australian property listings group controlled by Murdoch’s News Corp, has announced its third offer for UK rival Rightmove in a bid valuing the group at £6.1bn.

The latest proposal comes after Rightmove rejected a £5.9bn bid first revealed by DD’s Ivan Levingston that followed an £5.6bn opening salvo. The UK company has 80 per cent of the UK’s market share in online property listings but has warned of slowing customer growth.

While Rightmove quickly dismissed REA’s first two proposals, the UK group has said its board would “carefully consider” the latest proposal.

The M&A dance reminds DD of another takeover battle led by a corporation from down under earlier this year, when mega-miner BHP sought to prod the UK’s Anglo American to the bargaining table.

REA, founded in a garage in Melbourne in the 1990s, has grown to become one of the most lucrative parts of the News Corp empire since the Murdoch company invested in the business more than two decades ago.

Yet the property group is fielding demands from both sides.

Its approach for Rightmove comes as activist investors, led by Starboard Value, have increased pressure on News Corp to separate its property listings assets from the wider media operations.

In the well-worn playbook of UK M&A, REA has not declared its proposal best and final, even as it nears an end-of-September deadline to make a formal offer or walk away. That hints at room to increase the bid yet again.

How a PE continuation fund landed in bankruptcy

Continuation funds allow private equity firms to lock in profits by effectively selling a portfolio company to themselves and other co-investors.

They’re a clever way for firms to have their cake and eat it too: the vehicles allow groups to largely cash out, return money to investors, but still hold on to the asset for future upside and lucrative management fees.

But after the only asset in a continuation fund by Clearlake Capital — the co-owner of Chelsea FC — filed for bankruptcy protection this month, there’s fresh scrutiny on such funds, and whether there might be more failures on the horizon.

The saga of Clearlake’s continuation fund started in 2018, when the group bought car parts maker Wheel Pros in a buyout worth just over $400mn.

Then, in 2021, Clearlake set up a so-called “single asset” continuation vehicle called Icon Partners III to acquire the company for about $2.4bn, with the hope Wheel Pros would continue to grow and prosper.

The deal was heavily leveraged, but S&P predicted at the time that the company’s strong profits and free cash flow would allow it to pay off debt quickly. Instead, Wheel Pros filed for bankruptcy this month.

A general lack of blockbuster M&A and public listing prospects over the past couple of years drove private equity groups to get creative in how they returned money to investors. Continuation funds emerged as one solution.

But the risks of recent continuation vehicles “are that you are often putting more leverage on the company with floating interest rates”, said Steve Kaplan, a professor at the University of Chicago.

Wheel Pros had been on an acquisition bender the past few years. It bought more than half a dozen auto-related companies recently, including a firm called ZBroz.

Back in 2022, DD listed the many ways continuation funds can allow buyout groups to make a lot more money in fees and carried interest, sometimes at the expense of their investors.

Its senior lenders hope to turn the business around. Strategic Value Partners, Bain, Nut Tree and Centerbridge are set to control the company when it emerges from bankruptcy.

Job moves

• Trafigura is preparing to announce the appointment of Richard Holtum as its next chief executive as soon as next week, said people with knowledge of the matter. He currently runs the firm’s gas, power and renewables division, and would succeed Jeremy Weir, who is set to become chair.

• Santander has appointed John Baldwin as chief executive of corporate and commercial banking for the firm’s UK division. He replaces Tim Hinton who is retiring after more than six years in the role.

• UBS is forming a new corporate fixed income solutions group within its global banking division. The bank has appointed Mike Furber, who previously worked at Credit Suisse, to lead the team.

• Paul Weiss has hired Bianca Levin-Soler as a partner in the firm’s M&A and private equity groups in Los Angeles. She previously worked for Ropes & Gray and Kirkland & Ellis.

Smart reads

Steel predicament Nippon Steel’s proposed acquisition of US Steel has faced immense political pushback over national security concerns, the FT’s Rana Foroohar writes. But other thorny issues are at play.

Intel for sale The tech group has fallen behind in the hyper-competitive industry of chip manufacturing, Lex writes. Who will benefit if it’s put on the auction block?

Shrinking funds While Renaissance Technologies’ Medallion fund remains the stuff of legend, its offerings for external investors have collapsed in size, Alphaville writes.

News round-up

HSBC hit by sixfold surge in Hong Kong property loan defaults (FT)

Springer Nature targets €4.7bn valuation in delayed Frankfurt IPO (FT)

BNP Paribas to buy HSBC’s German private banking arm (FT)

FTC set to greenlight Chevron’s $53bn buy of oil rival Hess (Reuters)

US billionaire Dan Friedkin agrees to buy Everton FC (FT)

California accuses Exxon of misleading public on plastic recycling (FT)

CMA CGM to pursue further acquisitions after Brazilian port operator deal (FT)

US proposes banning Chinese software and components in vehicles (FT)

Northvolt to cut more than 20% of jobs in battle for survival (FT)

FCA chair cleared of wrongdoing over whistleblowing investigation (FT)