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Deadline deals

By Morag Dickson on May 01 2008

When rumours of Candover’s bid for a 25 per cent stake in insurance giant Towergate began to circulate earlier this year, it was a sign of what was to come with UK dealmakers rushing to sell up ahead of the change in Capital Gains Tax.

Although the European private equity house’s offer for Towergate was snubbed, leaving the way clear for US-listed hedge fund Och-Ziff, the £100 million deal was brokered in ten days and closed 24 hours prior to the 5 April deadline – saving shareholders a reported £8 million in duty.

NBGI Private Equity’s Richard Morley also made a timely exit when he disposed of boiler maker Hamworthy Heating for £35 million to a French conglomerate at the end of March. Closing the deal prior to the cut-off saved NBGI £2 million in taxes in addition to making Morley six times his original investment.

In contrast to the downward deal trend, the four weeks prior to the CGT deadline saw a burst of M&A activity with 85 UK deals completed compared with 80 in the same period last year, according to data provider mergermarker. However, on the whole UK deal values in the €5-€300 million range were down from €3.8 billion (£3 billion) to €3.1 billion (£2.4 billion) in the first three months of the year.

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