5th Nov 2018 17:36
LONDON (Alliance News) - GBGI Ltd on Monday said it has agreed the terms of an acquisition offer that values the insurance company at approximately USD131.8 million.
The recommended cash offer is for USD1.515 per share for the entire issued share capital of GBGI and has been made by Elm Bidco LP. Elm is controlled by affiliates of the private equity and venture capital firm Further Global Capital Management LP.
Shareholders may elect whether to receive their cash consideration in sterling.
The offer represents a 38% premium to GBGI's closing price of 84.50 pence on November 2, and a 39% premium to its one month weighted average price of 83.99p per share to that date.
Shares in GBGI closed down 5.2% at 80.09 pence on Monday.
Also included in the offer is the option for GBGI shareholders to elect to receive 1 class B interest in Elm for every 1 GBGI shares, limited to 17.4 million shares or approximately 20% of GBGI's issued capital, which will not be listed or traded on any exchange.
GBGI's directors recommend that shareholders vote in favour of the offer, but do not recommend that shareholders take up the class B interest option.
Those directors holding shares in GBGI have irrevocably undertaken to vote in favour, their shares representing 33% of capital. Further irrevocable undertakings from 57% of existing GBGI shares have already been received, meaning that 90% of shares have already been pledged in favour.
"We are pleased to have reached a dual agreement with [Elm] that offers shareholders a substantial cash premium to the current share price whilst retaining the opportunity for those shareholders to continue with their investment in the business should they so wish," said GBGI Chairman William Ward.
"Returning to private ownership will provide GBGI with enhanced financial and operational flexibility, together with savings relating to the costs which come from being a public company. Whilst there is potential for future growth in the equity value of GBGI from this time, we believe that the future development of the group can be best effected under the control of a single private entity," Ward added.