Tavistock Investments has responded to a statement released by Jersey-based fund manager Team regarding an offer it made to acquire the UK wealth manager.
Team said on 23 March 2021 that shareholders “deserve the opportunity to decide on the merit of any offer”.
It bid 2.50 pence per ordinary share, based on price at the time – the letter was sent on 11 March 2021. This would have added up to a total equity value of £15.2m ($21m, €17.6m).
But Tavistock said this was not the case.
The UK wealth manager claimed Team’s letter was “unsolicited” and “non-binding” and that the Jersey firm “omitted to mention” that the original bid offered one Team share for every 45 Tavistock shares.
According to valuations at the time, this would have equated to 2.00 pence per Tavistock share, “a 0% premium to the prevailing Tavistock share price”.
“The board unequivocally rejected the original approach on 15 March 2021 on the basis that it significantly undervalued Tavistock and its standalone projects”, the firm added.
Not a credible offer
Additionally, the UK wealth manager noted that Team is a “recently established public company”, as it was admitted to trading on the Aim “less than one month ago, on 8 March 2021, with a negligible track record of successfully acquiring and integrating businesses to create a larger group”.
“Team has approximately 16.56 million shares in issue, very few of which have been traded since it joined Aim. The shares can thus be considered illiquid.”
Tavistock continued: “The proposed offer continues to significantly undervalue the business that has been established by Tavistock. The board believes that a sum of the parts valuation of the Tavistock businesses, based upon industry standard matrices, would demonstrate that the true value of the company is several times higher than its current market capitalisation.
“The board does not believe there to be any commercial logic or sufficient operational synergies that would justify a combination of the two businesses.
“The board does not consider that a paper-only offer made using illiquid shares, that would represent over 50% of the offeror’s then enlarged issued share capital, is credible or warrants further consideration. At present, shareholders are advised to take no action.”