A cluster of buyout firms will table takeover offers this week for Domestic & General (D&G), the warranty provider which is also weighing plans for a stock market comeback.
Sky News has learnt that private equity groups including Clayton Dubilier & Rice, Onex and Warburg Pincus are expected to submit indicative bids for D&G ahead of a Friday deadline.
Offers are likely to value the company, which is owned by CVC Capital Partners, at about £1.2bn, City sources said on Wednesday.
Blackstone is also said to have explored an offer for D&G, although it was unclear whether a formal bid would be tabled.
The auction process comes amid turmoil in the market for initial public offerings (IPO), with companies including Vannin Capital, a litigation funder, and vehicle rental firm Leaseplan aborting listings last week.
People close to the situation said a flotation of D&G looked increasingly unlikely, although it was unclear whether any of the private equity bidders were prepared to meet CVC’s valuation target for the business.
CVC is said to be seeking a price worth up to 13 times D&G’s £99m earnings before interest, tax, depreciation and amortisation.
D&G insures millions of boilers, washing machines, televisions and cameras in 14 countries, and is chaired by David Tyler, who holds the same role at J Sainsbury, the supermarket chain.
Mr Tyler is due to step down from his Sainsbury’s role next year as it progresses its £15bn merger with Asda.
D&G was founded in 1912, initially insuring livestock in Western Australia, before its headquarters moved to London.
The possibility of an IPO was highlighted in accounts recently filed by Galaxy Finco, the warranty provider’s parent company, which reported a 6.5% rise in group revenue to £202m for the quarter to June.
D&G employs 2,900 people and has a broader network of 8,500 approved engineers, which it says is the largest in the UK.
It has core relationships with major consumer-facing companies including Argos and Sky, the owner of Sky News, and has a market-leading position in specialist warranties and home appliance care provision.
In total, D&G has 16.4 million customers and insures 24 million appliances.
The company was taken private in 2007 by Advent International, the private equity firm, in a £524m deal, before being sold six years later to CVC for £750m.
A sale or IPO of D&G would come at a time of increased regulatory scrutiny of the product insurance market at a time when companies in the rent-to-own sector have faced tough trading conditions.
People close to D&G pointed to Homeserve as the closest listed peer to it, but highlighted its strong relationships with appliance manufacturers and retailers as a point of differentiation for the business.
D&G is run by Ian Mason, the former chief executive of Electrocomponents.
The company and its potential suitors declined to comment.
(c) Sky News 2018: Buyout giants circle CVC-owned £1bn warranty provider D&G