Apollo Global Management’s [NYSE:APO] efforts to sell Intrado’s Life & Safety business have stalled, sources familiar with the matter said, as big-ticket dealmaking continues to be buffeted by intense macroeconomic headwinds.
The buyout group was nearing an agreement for the sale of the critical event communications software provider to Stonepeak Infrastructure Partners, but deteriorating market conditions, which has seen financing harder to come by, made signing a deal difficult, according to the sources.
Apollo had been seeking a valuation of more than USD 3bn, or a low-to-mid double-digit multiple of USD 300m-plus in EBITDA, for Intrado Life & Safety, the sources said. Stonepeak was aiming to support a buyout with a debt package worth roughly USD 1.8bn, leveraging the business at approximately 6x EBITDA, they added.
The sources said that any deal would have seen Apollo roll over part of its stake in the company. Apollo’s wish to remain invested under new ownership reflects its “huge conviction” about the business, which also operates part of the national 9-1-1 call routing and data delivery network, one of them said.
While both Apollo and Stonepeak mutually agreed to walk away from negotiations, the nature of M&A and everchanging macroeconomic conditions could still see a deal come together at a later date, the sources said.
The sale of Intrado Life & Safety joins a slew of other large-cap processes to come unstuck at the hands of market conditions. Walgreens Boots Alliance [NASDAQ:WBA] last month shelved a roughly USD 6bn sale of its UK drugstore chain Boots after failing to reach agreement over valuation with a bidder consortium due to credit market volatility, while trickier financing conditions are also complicating NCR’s [NYSE:NCR] plans to sell itself as part of an ongoing strategic review process, as reported by this news service.
A trio of rising interest rates, surging inflation and fears of a recession have created “unprecedented conditions” for dealmakers, according to one of the sources, with those looking to seal multibillion dollar transactions held particularly at the mercy of banks looking to temper their exposure to the syndicated loan market.
Market participants including private debt funds, which had earlier shown more appetite to underwrite riskier deals before pulling back, are in the process of determining where there is “firm ground” as a way of resetting their approach to lending, he said.
The value of M&A globally in the first six months of the year shed 23% to USD 2.2tn year-on-year, with the number of deals also down by a fifth in the same period, Dealogic data show. Though down by a third versus last year’s record first half, North America still accounted for nearly half of worldwide dealmaking value in 1H22.
Representatives for Apollo and Intrado declined to comment, while Stonepeak did not respond to requests for comment.
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