Sky News reports that an American private equity group has made an offer to buy Domestic & General (D&G) which is one of Britain’s biggest providers of warranties for domestic appliances if not one of the largest in Europe.
Sky News reports that a company called Stone Point Capital which a Connecticut-based firm is among those vying to buy D&G.
D&G’s current owner, Advent International, has put the company up for sale, and is understood to be hoping to achieve a sale price close to double the £524m it paid to buy the company in 2007.
Other large private equity firms could also be in the running such as Blackstone, Clayton Dubilier & Rice and CVC Capital, to acquire D&G, insiders said on Monday.
D&G has more than 4 million customers, covering more than 6 million appliances, such as washing machines, fridge freezers, ovens and central heating units. It has warranty partnerships with prominent brand manufacturers such as Electrolux and Whirlpool under the Cover +1 program.
The company was established in the unlikely surroundings of the Australian Outback in 1912, when founder Samuel Copley set up a company providing insurance cover for sheep and cattle transportation and, still to our knowledge holds links to Australia today.
Sky goes on to say that insiders say that Advent was likely to pursue a sale of the company rather than opting for a stock market listing, although they insisted that it was “keeping an open” mind about its options. The resurgent equity markets have prompted many private equity firms to rethink plans to sell companies privately because of the comparable valuations they might achieve from a public listing.
Goldman Sachs, which is handling the sale, also advised Advent on its takeover of D&G. The buyout group is a seasoned investor in financial services, and its plan to sell D&G comes at a busy time for corporate activity in the insurance sector, with esure, the motor specialist, set to announce its intention to float next week.
D&G’s business area has not been without controversy, with extended warranties a frequent target for the ire of consumer groups, which argue that they often provide cover of limited value for customers who can ill-afford it.
Homeserve, a rival player which competed with Advent to buy D&G in 2007, saw its fortunes suffer after becoming embroiled in a mis-selling investigation last year and we don’t think that Homeserve will be in the running this time around.
Advent declined to comment on Monday.