National World PLC on Friday acknowledged the merits of a takeover deal from its largest shareholder, but voiced concerns related to its affiliated entities.

Earlier on Friday the Leeds, England-based multimedia news organisation was the target of a takeover proposal by Media Concierge (Holdings) Ltd, which already owns 26% of National World, valuing the business at over £56 million.

National World shares soared 19% to 17.90 pence on Friday afternoon in London

The proposal, valued at £56.2 million or 21 pence per share, represents a 40% premium to National World’s closing price on Thursday. It seeks to acquire the 74% of shares that Media Concierge or its affiliates do not already own, implying an enterprise value of £43.2 million.

In response to the proposal, National World said it acknowledged the ‘potential merits of the deal’.

However, the firm also outlined significant concerns relating to the offer.

National World revealed that prior to the initial approach, on October 1 it was made aware of ‘a potentially systemic pattern of historical invoicing irregularities’ tied to the activities of Media Concierge’s affiliated entities.

The firm said it commenced an investigation the following day, adding that entities affiliated to Media Concierge are inappropriately withholding £4.4 million in revenue from the firm.

It said that in order for Media Concierge’s potential offer to be aptly evaluated, the firm has requested access to historical records to facilitate the investigation, but noted that the entities are yet to provide the relevant access.

National World confirmed its cash balance of £10.9 million notwithstanding the revenue allegedly being withheld and urged shareholders to take no action at this stage.

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