22nd Feb 2023 16:53
(Alliance News) - Providence Equity LLP's GBP300 million takeover approach for Hyve Group "still potentially undervalues" the London-based events organiser, according to Citigroup commentary.
On Tuesday, Hyve confirmed it received the conditional takeover approach by the Rhode Island, US-based media-focused equity investment firm and is considering its position.
The offered share price of 105 pence was 22% higher of 85.72p before the announcement, giving the offer a value of around GBP306 million.
Shares in Hyve were up 1.4% to 101.40p each in London on Wednesday afternoon.
Citigroup analysts Thomas Singlehurst, Ella Walker-Hunt and Praveen Shetty said this bid "still potentially undervalues Hyve".
"The confirmation of an unsolicited offer for Hyve at 105p suggests two things, in our view," said Citigroup.
"First, with specific reference to Hyve, it seems to confirm our hypothesis that Hyve was anomalously cheap at its undisturbed price. There is still an argument that the offer is below what we would deem fair value", Citigroup continued, outlining its price target for Hyve of 160p per share and that the 105p level "merely brings Hyve's valuation into line with quoted peers like Informa".
"Second, and more generically, it is an interesting signal of interest in a undervalued UK small and midcap asset from private equity. Given separate processes elsewhere that are ongoing (e.g. Ascential), this is an encouraging sign that stock markets are not the only arbiter of value even in these uncertain times."
Citigroup said this should be viewed as a positive for Hyve and business-to-business events/UK SMID media firms more broadly.
Hyve in December said revenue for the financial year that ended September 30 surged to GBP122.5 million from GBP21.8 million a year prior. Pretax loss however widened to GBP31.0 million from GBP27.5 million. It noted that its business had been "completely transformed", with about 95% of events taking place in advanced economies, up from 12% in 2017.
On Tuesday, Hyve said it will make a further announcement shortly.
By Greg Rosenvinge, Alliance News reporter
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