31st Oct 2022 14:38
(Alliance News) - Science Group PLC on Monday said it is agreed to buy fellow AIM listing TP Group PLC, finally sealing a takeover after a failed tilt a year ago, after TP Group's finances significantly deteriorated.
Shareholders in the Wincanton, England-based consulting, software and engineering company will receive 2.25 pence per share in cash, a significant premium to the closing price of 0.78p on Friday. The transaction values TP at around GBP17.5 million.
TP shares jumped on the news, quoted at 2.19p on Monday afternoon in London. However, as recently as June 2020, the stock traded above 8p.
Science Group shares were 4.9% higher at 398.50 pence each, giving the Cambridge, England-based research and regulatory consultancy services firm a GBP180.6 million market capitalisation.
Around 12% of TP Group shareholders have given a letter of intent to accept the offer. Science Group itself already holds a 28% stake, meaning almost 40% support in total.
A hostile takeover for TP Group by Science Group failed in August of last year, amid an exchange of accusations, but Science Group kept the large shareholding that it had acquired and the following month forced out TP Group's chair and its chief executive officer.
TP Group's board on Monday unanimously recommended the offer from Science Group.
Explaining its decision, TP Group said on Monday: "To remain as an independent company, the capital structure of the group needs to be addressed. It is not certain that any refinancing can be completed on terms which would be acceptable to the board or TP group shareholders."
Providing an update on its TPG Maritime division, TP Group commented on an economically unviable contract which it referred to as 'Contract A' with a 'UK customer'.
"The overspend on this large, fixed price contract only became apparent early in 2022, resulting in material provisions and prior year adjustments as previously reported. Continuing with this very onerous contract in its original form was not financially viable for TPGM, placing the business at serious risk of insolvency."
TP Group has reached an agreement to restructure the contract as a qualifying sub-contract. The company said that while the terms remain sub-optimal, it would be in the best interest of all stakeholders to accept the compromise due to current supply obligations.
By Tom Budszus; tombudszus@alliancenews.com; and Tom Waite; thomaslwaite@alliancenews.com
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