The battle for De Vere looks all but over. Private equity firm Permira has announced that it is no longer interested in bidding after its rival, AHG Venice, upped its offer first to 850p from its original 825p and then 875p.
It means that De Vere has gone for a price at the top end of most expectations and a punchy multiple for what is a comparatively motley collection of assets.
The offer values the equity in De Vere at £767.4m which added to debt of £205m gives a multiple on the £80.8m 2005 EBITDA of 12 times.
According to AHG, the unusual move of raising the bid at the end of last week (Thursday) and then upping it again at the start of this week (Tuesday) was necessary to put in a \knockout\ bid.
Certainly, shareholders were expecting more after the initial raising to 850p as De Vere's share price leapt up to 865p. The leap was driven by rumours that Permira was considering a bid of up to 875p.
But at 875p, Permira needed to come in at more than 8p more than that to make up for the £7.2m break-fee that AHG has negotiated with De Vere's board. Not surprisingly, Permira has thrown in the towel. It is also difficult to see other bidders – Starwood Capital is among those that have looked hard at the assets – entering the fray at this stage.
It appears AHG is set to pay a full price for De Vere – as it did to win Initial Style Conferences – but it draws comfort from the property backing within the company.
The bid might be deemed to be calling the top of the current property cycle or it might prove to be a shrewd gamble that the underlying assets have yet more value to be squeezed from them.
The bull case can be made on the increasing acceptability of hotels as a property asset class and the likelihood of property price increases in the wake of the introduction of REITs in the UK at the start of this year.
Further chasing up the price of property is the huge amounts of cash available, something which Permira itself is contributing to.
It is about to raise Eu11bn, making it the largest European private equity fund, and putting it in the top four in the world. The world's top five PE funds now have $70bn worth of firepower which has to be spent over the next three to five years.
For the bear case, it only needs a glance at the underlying businesses supporting these assets. The woeful profit growth at De Vere itself is a case in point.
Quite where the current cycle will lead remains to be seen. But in the short-term at least, only those with deep pockets can play in the game.
It might make sense not to buy anything and it may save you bundles in the long-term. However, it won't make you any money either and it is the desire to put cash somewhere that seems to be driving the deal flow.