A possible competing bid for Purmo

Translation: Original comment published in Finnish on 05/31/2024 at 7:41 am EEST

Purmo announced yesterday that it had received a preliminary non-binding indication of interest from Haier Smart Home. According to the release, the cash consideration for the C share would be EUR 11, while the current bid is EUR 9.91 (EUR 8.91 to Rettig). If Haier confirms its interest, the higher offer would naturally be better for investors. However, while the matter is still uncertain, we make no changes at this time to our target price based on a possible new offer. 

The main owner Rettig is in the key position but the highest bid is likely to win

According to the company, the potential competing bid has been submitted by Haier Smart Home, a British company. However, Haier Group is a larger group of companies, which we believe is a Chinese group. The price of EUR 11 quoted by the company is naturally clearly more attractive to investors than the previous lower offer. As the offer is not yet official, Purmo’s Board of Directors will not comment on it yet and maintains its recommendation for the ongoing bid by the Apollo and Rettig consortium. As a majority owner, Rettig is crucial to the fate of the company. From Rettig’s point of view, the possible EUR 11 offered by Haier would be clearly more attractive than the EUR 8.91 it would receive in the previous offer, although in the initial offer,  Rettig would remain an owner of Purmo with a 20% stake so the structure of the bid is different.

We do not, however, believe that giving up Purmo entirely is a threshold question for Rettig if it is offered a good price, which we consider EUR 11 to be. Naturally, the Apollo and Rettig consortium can raise their offer even before Haier’s potential bid or after its possible publication to improve the chances of their bid. We commented on the initial offer a month ago in our report.