Clayton Dubilier & Rice’s efforts to sell Motor Fuel Group Ltd. are stalling, people familiar with the matter said, as a growing number of high-profile deal situations fall prey to a worsening macroeconomic environment.
The private equity firm has seen negotiations with potential buyers of the U.K. gas station operator falter over asking price and the availability of financing, the people said, asking not to be identified discussing confidential information. It has been seeking a valuation of about £5 billion ($6 billion), Bloomberg News reported previously.
CD&R is satisfied with the performance of MFG and is in no rush to sell the business, according to the people. It is prepared to wait, possibly until next year, for conditions to improve to ensure its price expectations are met, they said. Deliberations are ongoing and a buyer could still emerge with a compelling offer, the people said.
U.S. asset manager Fortress Investment Group LLC was among a select group of suitors studying the business, Bloomberg has reported. A representative for CD&R declined to comment, while a spokesperson for MFG didn’t immediately comment.
Rampant inflation, rising interest rates and the threat of recessions have combined to give companies and their lenders pause for thought in the pursuit of big-ticket acquisitions. Buyers are wary of overpaying for assets as valuations tumble, while banks are nervous about becoming too exposed to the leveraged loan market. Private debt funds, which have stepped in to lend on deals, are also now starting to dial back on risk.
Dying Deals
In Europe, the challenging conditions have already led to a number of mergers and acquisitions either being delayed or pulled altogether. Last month, two investor groups dropped their pursuit of former British tech darling THG Plc, while Walgreens Boots Alliance Inc. announced it was abandoning a £5 billion-plus sale of its Boots drugstore chain. U.K. consumer giant Reckitt Benckiser Group Plc, meanwhile, is considering shelving a $7 billion sale of its baby formula business in part because of problems in the financing markets.
To be sure, multibillion-dollar private equity deals are still getting done. BC Partners agreed to buy a roughly 50 percent stake in Italian packaging firm Fedrigoni SpA in a transaction backed by a 1.18 billion-euro debt package.
Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc. and Royal Bank of Canada have been advising CD&R on the sale of MFG. People familiar with the matter said that the banks were also offering up debt to finance a takeover of MFG — giving potential buyers some security of financing.
MFG is one of the UK’s largest independent gas station groups, with more than 900 forecourts operating under major oil brands including BP Plc and Esso, according to its website. It plans to roll out more charging hubs for electric vehicles as it shifts to a dual fuel strategy over the coming decades.
