- 200p per share offer accepted
- 21.2% uplift on ABC’s initial bid
- TI Fluid valued at £1.04 billion
Another one bites the dust. Automotive fluid storage and delivery specialist TI Fluid Systems (TIFS) looks set to become the latest company to exit the UK stock market.
Having spurned earlier bids from ABC Technologies, the car parts supplier has succumbed to the private equity backed group’s overtures and recommended a £1.04 billion takeover.
Under the terms of the all-cash deal, expected to close in the first half of 2025, TI Fluid Systems’ shareholders will receive 200p per share.
That represents a 21.2% uplift on ABC’s initial 165p offer and a 55% premium to the thermal management and fluid handling systems provider’s 129.5p share price on 13 September, the last trading day before it entered an offer period.
Back in September, TI Fluid Systems rejected two approaches from Apollo-backed ABC Technologies worth 165p and 176p per share respectively.
But in October, the London-listed car parts supplier said it was ‘minded’ to recommend a 200p offer, having rejected two further proposals pitched at 188p and 198p per share respectively.
Shares in TI Fluid Systems ticked up 2% to 193p in early deals on the latest news, below the offer price and implying investors view this as a done deal with counterbids unlikely to emerge.
WHY TI FLUID THREW IN THE TOWEL
The board of TI Fluid Systems, which designs and makes automotive thermal management and fluid systems suitable for all vehicle types, is unanimously backing the ABC deal.
It argues the takeover provides the opportunity for shareholders to realise ‘an immediate and certain cash value today for the entirety of their investment at a level which may not be achievable until the execution of TI Fluid Systems’ strategy is delivered over the medium to longer term, with that execution subject to a number of factors outside of TI Fluid Systems’ control.’
The company has struggled to make much headway since its 2017 IPO (initial public offering), not helped more recently by the uncertainty in the automotive market where regulation is pushing for a transition to electric vehicles but consumer demand isn’t keeping up.
As for Toronto-based ABC, it believes TI Fluid Systems represents a ‘compelling opportunity to acquire a leading global manufacturer of fluid systems and thermal management solutions that is strategically and culturally complementary.’
DOMINANT THEME
Dan Coatsworth, investment analyst at AJ Bell, said takeovers continue to be the dominant theme for UK stocks, with TI Fluid Systems ‘the latest company heading for the exit. ABC Technologies has finally turned its 200p per share proposal into a formal bid and TI Fluid’s board is recommending shareholders vote in favour of the deal.’
Coatsworth continued: ‘Like many other takeover targets over the past few years, TI Fluid struggled to generate much excitement among investors and traded on the type of valuation that left it vulnerable to a bid. The shares have traded below eight times 12-month forward earnings since 2022, which put TI Fluid in bargain basement territory. It was only a matter of time before someone gobbled it up.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
