Apex buys Mainstream for AUD$415m

Apex Group has bought Australian fund administrator MainStream Group.

Mainstream’s board accepted Apex’s offer of AUD$2.80 cash per share. The deal values the company at AUD$415m EV, including transaction costs and net debt. The deal marks a 133% increase on the original bid.

With the addition of Mainstream, Apex has 50 global offices, and a total of 5,000 employees servicing $1.4trn in assets across administration, depositary, custody and under management.

“In addition to representing excellent shareholder value, the acquisition provides Mainstream clients with access to a significantly broader range of solutions and technology investment via Apex’s global network,” said Martin Smith, CEO of Mainstream. “Apex has successfully integrated a number of strategic acquisitions in recent years, with 99% client retention rates, and we anticipate a similar outcome for Mainstream. We see an acquisition by Apex as beneficial for our clients, shareholders and employees.”

Bidding war

The bidding for Mainstream initially started on 9 March, when Vistra offered to buy Mainstream shares for AUD$1.20, in a deal which valued the company at AUD$153m EV. However, despite Mainstream’s directors unanimously recommending the deal at the time, the takeover didn’t materialise.

On 12 April, SS&C joined the race with an offer of AUD$2.00 per share, valuing the company at AUD$286m EV. At the time, Mainstream’s board unanimously recommended the deal.

The next publicly announced bid came again from SS&C on 27 April, when the firm presented an increased offer of AUD$2.25 per share, increasing Mainstream’s EV to AUD$321m. 

Around the same time, Apex announced it had launched tax services in Australia via its subsidiary Thorgmorton, further demonstrating the firm’s commitment to expanding in the APAC region.

On 29 April, Apex increased its bid to AUD$2.35 per share, the deal again increasing Mainstream’s value to AUD$336m. On the same day, SS&C matched this offer with the same pricing.

On 30 April, Apex took the lead with a bid for the fund administrator at AUD$2.55 per share (AUD$364m EV), and was confirmed at the time as a “superior proposal” for the acquisition on 4 May.

However by 6 May, SS&C upped the ante with another increased offer of AUD$2.56 per share (AUD$366m EV), which was immediately outbid by Apex on the same day, when the firm offered Mainstream AUD$2.61 per share (AUD$371m EV).

By 14 May, SS&C came back in with a new bid of AUD$2.61 per share (AUD$373m EV). Apex again became the front runner on 18 May with an offer of AUD$2.65 per share (AUD$379m EV).

On 25 May, SS&C was still determined to stay in the running and upped its offer for Mainstream to AUD$2.66 per share (AUD$380m EV). Unfortunately this was short lived as Apex, still on its tail, swooped in with a bid for AUD$2.75 per share (AUD$393m EV).

SS&C once again tried to stay ahead by offering Mainstream AUD$2.76 per share (AUD$394m EV) on 1 June. However on 10 June, Apex stepped ahead with another increased offer of AUD$2.80 per share (AUD$400m).

By 17 June, competitor SS&C bowed out of the race, announcing it had “decided not to exercise its matching rights” to buy Mainstream, which saw Apex take poll position to be named as the successful bidder.

For the transaction, Apex was advised by Macquarie Capital (financial adviser) and Herbert Smith Freehills (legal adviser), while Mainstream was assisted by Mikes Advisory Partners (financial adviser) and Maddocks (legal adviser).