29th Jan 2016 17:41
LONDON (Alliance News) - Cathexis UK Holdings Ltd on Friday said it has raised its cash takeover offer for construction services group ISG PLC significantly, following ISG's board having consistently reiterated its opposition to the first offer.
Cathexis later Friday said it has now pushed its stake in ISG over the 30% threshold, making the offer final and mandatory.
Cathexis said it has offered 171.00 pence per share in cash for ISG, significantly higher than the 143.00 pence per share it had made previously. The new deal values ISG at GBP84.6 million and is a 40% premium to its closing price on December 10, the day before the first offer was made.
ISG has consistently urged shareholders to reject the deal, saying it undervalues the business. In a later statement on Friday, the company said it would issue a formal response to the offer soon, but urged its shareholders not to take any action.
The offer had come after ISG has issued a trading update saying that while most of its units had performed in line, its UK construction business has continued to struggle from the effects of troublesome legacy contracts on its margins.
Due to a focus on clearing the decks of these contracts, ISG warned its UK construction arm would be loss-making in the year to the end of June, with some revenue pushed into the next financial year.
In a further statement released late on Friday, Cathexis said one of its wholly owned subsidiaries acquired 297,762 shares in ISG at a price of 171.0 pence each, which has increased Cathexis' aggregate holding to over 14.9 million ISG shares, representing a 30.13% stake.
That market purchase has pushed Cathexis' aggregate stake in ISG over the 30% threshold, which means it must revise the terms and conditions of the increased offer, making the deal final and non-negotiable moving forward.
"Accordingly, Cathexis announces that the increased offer is now a mandatory offer for the whole of the issued and to be issued share capital of ISG not already held by Cathexis and its concert parties at a price of 171.0 pence per ISG Share," said Cathexis.
Cathexis already owns a 29.5% stake in ISG.
ISG shares were closed up 14% to 165.25 pence on Friday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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