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Saga ends with good and with bad

The end of the takeover battle for UK over-50s group Saga is good news for private equity but bad news for the equity capital markets.

UK buyout firm Charterhouse won the race for holidays and insurance provider Saga in a £1.35 billion ($2.43 billion) bid, with a little help from Merrill Lynch. The US bank backed Charterhouse, allowing it to raise its bid above a consortium of JPMorgan Partners and Candover.

The deal is another boost for the flourishing private equity market, which has seen a growing war over Northern Irish pharmaceutical company Warner Chilcott between Bain Capital and Kohlberg Kravis Roberts, the largest equity deal in Hungary for eight years involving Vienna Capital Partners and, yesterday, the biggest-ever private equity deal in Spain ? the takeover of Ahold's Spanish arm by Permira for ?685 million ($844.2 billion).

But the deal is bad news for the UK equity market, which would have benefited from Saga's flotation. Saga had been scheduled for an IPO, with UBS already mandated as sole global co-ordinator, sponsor and bookrunner for the offer. The bank was running a dual-track process ? planning an IPO while asking for private equity offers. The UK equity market has grown in number and volume since the beginning of the year, culminating in the flotation of the Admiral Group for £711 million in September.

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