- Opportunists drawn in by low valuations
- THG shares up over 40% as Apollo swoops
- Wood Group receives its fifth offer
Private equity has reignited the takeovers inferno with a number of UK-listed companies attracting opportunists with bulging pockets.
Oil services group John Wood Group (JW), payments company Network International (NETW), and retail platform THG (THG) have drawn buyout proposals, while the maker of computer games blockbuster Angry Birds - Rovio (ROVIO:HEL) shows that takeovers are not exclusive to UK shores.
WHY ARE TAKEOVER ACCELERATING?
Russ Mould, investment director at AJ Bell says: ‘Takeovers seem to be falling into two camps at present. They’re either being driven by cheap valuations which means predators can strike a bargain, particularly if foreign exchange rates are working in their favour. Or deals are happening because companies have hit a wall and need fresh thinking from a new owner to create value.
‘Everything is up for sale at the right price and given the uncertain economic outlook it seems that boards are minded takeovers as long as shareholders are not being messed about by unrealistically low offers. That situation might be a lot different in a stronger economic environment,’ Mould adds.
Shares in energy industry engineer and consultancy rose nearly 7% in early trading to 226p on the announcement that they were in talks with US private equity group Apollo for a potential £1.66 billion takeover.
FIFTH TIME LUCKY?
Prior to this Wood has rejected four proposals from Apollo.
In a statement the Aberdeen headquartered company said: ‘On 4 April Apollo Management Holdings, on behalf of certain investment funds managed by it, announced that it had submitted to the board a fifth proposal to acquire the entire issued and to be issued ordinary share capital of Wood at a final price of 240p per share in cash.’
Wood added in a statement: ‘Apollo has stated to the Board that it values the skills and capabilities of Wood’s employees and believes the company is well positioned in its markets and at the forefront of the energy transition and industrial decarbonisation.’
AGREEABLE PRICE
FTSE 250 payments company Network International saw its shares rise more than 18% to 359p in early trading after it received a non-binding takeover proposal from a consortium of CVC Capital and Francisco Partners of 387p a share.
Network International said that its board had agreed to provide the consortium access to ‘confirmatory due diligence’ data.
The company is one of the largest payment processing firms across the Middle East and Africa, and listed in London in April 2019 at an IPO (initial public offering) price of 435p a share.
Jefferies analysts wrote in a note: ‘We talked to several Network shareholders over recent days suggesting an above 400p offer to be acceptable.’
But beware. The ‘share price this morning is below the mooted offer price, suggesting some investor caution on the offer materialising,’ pointed out Megabuyte analyst Rob Warensjo.
LOOKING FOR A BUYER
Angry Birds video games maker Rovio caught the eye of Japanese giant Sega (officially Sega Sammy (6460:TYO) lifting its shares by 17% in early trading to €9.16.
Sega is looking to buy the Finnish-listed company for €706 million in order to boost its mobile gaming business.
Sega is offering €9.25 a share for Rovio, a 19% premium over Friday’s closing price (14 Apr) in its tender offer bid to be launched around 8 May.
Mould says: ‘Angry Birds video games maker Rovio has been looking for a buyer for some time after failing to repeat its success with new intellectual property. Sega Sammy has already struck gold with Sonic the Hedgehog and now fancies its chances with Rovio’s flock of assets.
‘A shared fascination with animals doesn’t guarantee future success. Sega might be able to further milk Rovio’s existing intellectual property but very few titles can be regurgitated into successful new games and spin-off activities such as films and merchandise ad infinitum.’
THG SHARES UP 40% AFTER APOLLO OFFER
Shares in online retail platform THG jumped more than 40% to 94p as it received a preliminary takeover approach from Apollo Global Management.
In a statement, THG said: ‘The board of THG notes the recent press speculation regarding THG and confirms that it is currently in receipt of a highly preliminary and non-binding indicative proposal from Apollo Global Management Inc. There can be no certainty that any firm offer will be made. A further announcement will be made if and when appropriate.’
THG has been subject to takeover interest several times in recent years, most recently in January 2023, when activist Kelso Group looked at the opportunity to unlock value.
