Berkshire in advanced talks to buy H&F’s Catalina Marketing which has the world’s largest shopper history database; EBITDA $230m

Berkshire in advanced talks to buy H&F’s Catalina Marketing – sources

6:01pm EST

By Soyoung Kim and Greg Roumeliotis

NEW YORK (Reuters) – Private equity firm Berkshire Partners LLC is in the late stage of negotiations to buy Catalina Marketing Corp from Hellman & Friedman LLC, according to people familiar with the matter, in a deal expected to be worth more than $2 billion.

The Boston-based buyout firm has emerged as the lead bidder in the auction for Catalina Marketing and is in talks to finalize a purchase agreement in coming days, the people said on Thursday.

Discussions are ongoing and could still fall apart, the people cautioned, asking not to be named because the matter is not public. Berkshire and Hellman & Friedman declined to comment, while representatives for Catalina could not be immediately reached for comment.

Bank of America Merrill Lynch (BAC.N: QuoteProfileResearchStock Buzz), which is advising Hellman & Friedman on the sale process, also declined to comment.

Reuters first reported in January that Hellman & Friedman was exploring a sale of Catalina Marketing, which has the world’s largest shopper history database according to its website.

Catalina has annual earnings before interest, tax, depreciation and amortization of around $230 million and was hoping to fetch at least 10 times that amount in a potential sale, people familiar with the matter said previously.

Catalina says it influences the decisions of more than 75 percent of American shoppers through marketing services that include coupons at retail checkout counters, promotions delivered to consumers’ smartphones and websites.

The Saint Petersburg, Florida-based company works with more than 25,000 grocery, drug and department stores across the United States, including Safeway Inc (SWY.N: QuoteProfileResearchStock Buzz), Rite Aid Corp (RAD.N: QuoteProfileResearchStock Buzz) and Sears Holdings Corp’s (SHLD.O: QuoteProfile,ResearchStock Buzz) Kmart discount chain, according to its website.

The auction initially drew interest from other private equity firms including Silver Lake Partners and BC Partners Ltd, according to the people familiar with the matter.

But these firms decided not to submit final bids due early this week, concerned about the marketing industry’s transition to digital and its potential impact on Catalina’s growth trajectory in the next several years, the people said. Silver Lake declined to comment, and BC could not be immediately reached for comment.

Catalina had revenue for the 12 months to the end of June of $661 million, according to Moody’s Investors Service Inc. Hellman & Friedman took Catalina private in 2007 in a $1.7 billion deal.

The San Francisco-based private equity firm has sold at least two other of its portfolio companies in recent months to take advantage of red-hot capital markets that favor buyout firms which seek to cash out on their investments.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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