Can Private Equity Buyers Be Suitable Purchasers of Divested Assets for Antitrust Regulations?

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In the last five years, the European Commission (EC) has required divestitures in more than 70 antitrust cases, requiring merging parties to divest business assets as a condition to receiving regulatory approval. This increasingly interventionist approach from competition regulators presents opportunities for buyout firms to acquire divested assets. However, regulators are increasingly imposing upfront buyer requirements to ensure the ongoing success of the divested business — divested asset purchasers must be approved before the underlying merger transaction can be completed. PE buyers may need to significantly advance transaction work, including negotiating final form documents (which must be provided to the regulator for review), before they find out if they are a suitable purchaser. Since the divestment assets are often valuable businesses that would not ordinarily come to market, PE sponsors’ effort in such processes can be well worth it.