Key Takeaways:
Apollo Global Management said Friday it will not proceed with a firm takeover offer for Bodycote, ending a £1.52 billion ($2.04 billion) pursuit that had sent the UK thermal processing company's shares to their highest level in more than four years.
The New York-based private equity firm had submitted a conditional all-cash proposal of 885 pence per share on May 22, representing a premium of almost 27 percent to Bodycote's undisturbed price. Under UK Takeover Code rules, Apollo is now barred from making another approach for six months unless the Bodycote board recommends a deal, a rival bidder emerges, or there is a material change of circumstances.
"Apollo continues to hold Bodycote and its management team in high regard," the firm said in a statement, without providing a reason for its decision to walk away.
Bodycote shares fell as much as 10.1 percent to 746 pence in European morning trading, unwinding much of the premium that had built into the stock since the approach was made public. The stock remains up about 6.6 percent year to date. The FTSE 250 company said it continues to have confidence in its standalone strategy and had a positive start to 2026.
The withdrawal marks the end of months of takeover speculation surrounding Bodycote, a leading provider of heat treatment and thermal processing services for the aerospace, automotive, energy and industrial manufacturing sectors. Under the original proposal, Bodycote shareholders would have been allowed to keep the proposed final dividend of 16.1 pence per share for 2025.
Apollo's pullback removes the immediate prospect of a deal for one of the UK's few remaining mid-cap industrial specialists viewed as a strategic asset. The six-month restriction under the Takeover Code limits Apollo's ability to return unless a competing bidder emerges or the Bodycote board invites a new approach, though the firm explicitly reserved the right to acquire Bodycote shares in the market subject to applicable regulations.
The failed bid could temper sentiment for other UK-listed industrial companies seen as potential private equity targets, particularly as higher financing costs have made leveraged buyouts more expensive. Bodycote's relatively specialized service offering and global footprint had made it an attractive candidate for a take-private transaction, but Apollo's decision suggests the pricing gap between buyer and seller may have been too wide to bridge.
This article is for informational purposes only and does not constitute investment advice.
