Focus Financial Mulls $4B Offer From PE Firm

News February 02, 2023 at 02:33 PM
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Focus Financial Partners said early Thursday that it signed an exclusivity agreement with private investment firm Clayton Dubilier & Rice that gives CD&R a limited period of time to discuss and settle the terms by which it might acquire Focus and take it private for $53 per share in cash.

According to Focus — which is led by Rudy Adolf — the suggested price of $53 per share represents a 36% premium to its 60-day volume-weighted average price as of Wednesday's close and a 48% premium to its closing stock price on Dec. 28, 2022.

The firm, which staged its initial public offering in July 2018, will no longer be a publicly traded company if such a transaction is consummated. Its shares, which trade under the ticker DOCS, were up roughly 8% at nearly $50 per share as of 3 p.m. ET Thursday.

On Nov. 1, Focus' board of directors formed a committee to review CD&R's initial nonbinding offer and to explore alternative deals. The committee told its financial advisors "to broaden their outreach and contact other potential bidders regarding interest in a definitive transaction" on Dec. 28, the firm explained in a press release.

CD&R recently told Focus that its latest nonbinding offer of $53 per share represented its "best and final" offer, Focus said, and that this offer was submitted "with the understanding that there would be no further price negotiations."

The firm adds that the talks about definitive terms and agreements are "ongoing," with "no certainty that final terms of any transaction will be agreed upon or, if agreed upon, completed."

Also, any deal would be subject to "the completion of due diligence, board and stockholder approval, regulatory approvals and other customary conditions." 

Focus closed 38 deals in 2021 (acquiring 14 new partner firms and completing 24 mergers) and signed or closed 30 transactions in 2022 (including 24 mergers and acquiring six partner firms), according to the company.

It reported net income of $29 million and sales of $520 million for the quarter ended Sept. 30, 2022. The firm is expected to report its latest earnings on Feb. 16.

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