Apollo Global Management Circles Tripadvisor
Private equity news the week of March 11th, 2024
Insights
Chart of the Week: While some private equity operating groups have started recruiting more heavily from consulting, Carlyle still has a strong bias for former CEOs with industry experience. 81% of Carlyle’s operating executives – who serve as very involved advisors for portfolio companies – have C-level experience, and 75% have worked for a Fortune 500 company. For comparison, roughly one in four operating partners in KKR Capstone have C-level and Fortune 500 experience. (Read More)
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Deal News
Apollo Global Management is reportedly in talks to acquire Tripadvisor. Other interested firms include Permira, CVC, EQT, and Softbank. A strategic acquirer, such as Expedia, is unlikely to make a bid given regulatory concerns of another merger in an already-consolidated industry. A deal could be imminent, as Tripadvisor has already formed a special committee to evaluate selling certain assets. Insiders reportedly believe the outcome of that evaluation will be a complete sale, as the board isn’t confident in the management team’s ability to turnaround the company, according to travel industry publication Skift. Equity research analyst Tom White, points out that the company has provided very little forward-looking guidance in recent earnings, and believes there is a “very high likelihood” that a deal is already in the works.
What makes Tripadvisor such a compelling takeover target for private equity is its slowing growth despite still holding a lot of brand equity in a large industry. Tripadvisor’s stock price currently trades at a $3.7 billion valuation, roughly half the price it traded for in 2021. The company reported $334 million of adjusted EBITDA in 2023 from $1.8 billion in revenue. Its core business, the namesake travel planning search engine, reported just +7% revenue growth last year. Meanwhile, its Viator brand, a tour planning business that it acquired for $200 million in 2014, now accounts for 41% of total company revenue, up from 33% in 2022. Some analysts believe that a private equity takeover could lead to spinning-off Viator and other sub-brands, as they might perform better as standalone businesses.
In other news …
EQT is looking for a nearly 2x return on its turnaround of Nestle’s skincare business, called Galderma. The buyout firm acquired the portfolio of brands, which includes Cetaphil and Restylane, for $11.6 billion in 2019. It was a bold investment, which came out to roughly 18 times EBITDA. But now, EQT is preparing to exit the business and is seeking a reported $20 billion valuation via a public listing, according to Bloomberg. (Source)
