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ZURICH (Reuters) - Switzerland's takeover regulator still has concerns about some terms of Swedish private equity firm EQT's takeover of travel group Kuoni KUNN.S and rejected an appeal by a major shareholder over a planned share swap associated with the deal.
EQT declined to comment on the takeover board's decision and how that might affect its offer for the ailing travel group, which has been hit by competition from online travel companies and unrest in popular tourist destinations.
The shareholder, the Kuoni und Hugentobler Foundation, said in a statement that it was still deciding whether to challenge the board's ruling, announced on Thursday, but said it expected the 1.35 billion Swiss franc ($1.41 billion) deal unveiled last month to go ahead as planned.
Under Swiss takeover regulations, the foundation has five trading days to decide whether to accept the board's decision or pursue the matter further.
The watchdog first set out conditions for EQT's purchase of Kuoni on Feb. 25, which included the stipulation that the "best price" rule, guaranteeing equal treatment of all shareholders, must apply. The foundation initially appealed against the ruling in early March.
Stockholm-based EQT has offered 370 Swiss francs per share to holders of Kuoni's publicly traded "B" shares.
Separately, the foundation agreed to tender to EQT's Luxembourg-based Kiwi Holding vehicle its unlisted "A" shares, which accounted for 6.25 percent of the capital and 25 percent of the voting rights of Kuoni, in return for a stake in Kiwi.
The value of that deal has not been publicly disclosed. EQT's offer prospectus, dated Feb. 29, said "the value at which the Kuoni A Shares will be contributed has not yet been agreed".
The foundation had said the A shares were a distinct asset class and should be treated differently from the B shares. But the Swiss watchdog has insisted that the "best price" rule must apply to the transaction.
The publicly traded B shares, which fell by just over 3 percent in early trading, were 1.1 percent lower at 361.75 Swiss francs by 1236 GMT (8.36 a.m. ET), below EQT's offer price.
The foundation, based in Stans, Switzerland, said the offer to B-share holders was not affected by its considerations on whether to challenge the ruling, and it was "still convinced that the transaction will be carried out as planned".
Jon Cox, an analyst at Kepler Cheuvreux in Zurich, said in a note to clients that the takeover board's ruling was unlikely to scupper the deal but could force the foundation and EQT to renegotiate their part of the transaction.
Cox said that as the takeover board had ruled against EQT offering the foundation a premium to B-share holders, and given that EQT has said it won't raise its bid, the foundation will likely have to take a smaller holding in Kiwi.
EQT's offer is set to run until April 13 unless it is extended.
Editing by Nerys Avery and Alexander Smith