Managed services communications and IT supplier Alternative Networks (AN.:AIM) (AltNet) has agreed a £165m, 335p per share cash offer by private equity-backed peer Daisy.
This is a 17% premium to the shares closing price on Friday 18 November, explaining today's 16.5% jump in the stock. But it's a fair way below the 30% to 35% premium of typical takeovers and way off the 500p-plus share price highs AltNet hit a year ago.
Shareholders needn't gripe: life is tough at the moment for AltNet. A declining UK telecoms market, post-Brexit vote uncertainty and the increasing challenge of meeting rising dividend payouts are all cited as reasons for accepting the deal by AltNets' board.
Today's deal comes against the backdrop of a tough year for AltNet which has dealt out three profit warnings in 12 months. That has seen analyst estimates of earnings before interest, tax, depreciation and amortisation (EBITDA) fall to £18.4m compared with £24m at the start of the year.
Substantially bigger after an M&A splurge, analysts estimate that Daisy has substantially more financial muscle to grow. It is believed to be currently running at about £85m EBITDA on revenues at around £548m.
AltNet has been a generally solid and well-regarded stock market performer over its many years on AIM, but it operates in a telecoms industry going through massive change and the company has found it tough staying ahead.
Today's deal also gives major shareholders, such as founder James Murray (with 28.8% of the shares), a clean exit from the business at a price that might have been difficult to match down the line.
'Overall, this deal feels as if Alternative Networks shareholders are throwing in the towel after a difficult few months,' says Philip Carse, of IT consultancy Megabuyte.
'There is the possibility of a counter-bid, though we suspect that most buyers would struggle to justify much more than the Daisy offer,' the analyst adds.
And it's worth remembering, Daisy itself was bought out as a publicly traded AIM business at a 9% premium, which makes a 10-times fiscal 2016 EBITDA multiple look pretty decent value for all concerned.
