5th Aug 2022 14:25
(Alliance News) - Liberum on Friday said an improved takeover offer for Go-Ahead Group PLC all but ensures a new suitor for transport provider will not come into the fold.
The broker, however, said the new bid is still below what it feels Go-Ahead is worth.
Australasian bus operator Kinetic Holding Co Pty Ltd and Madrid-based transport infrastructure firm Globalvia Inversiones SAU on Thursday tabled a new bid of 1,550 pence per share, valuing Go-Ahead at GBP669 million.
It was a step-up from the previous bid of 1,500p per share, which gave Go-Ahead a valuation of GBP647.7 million.
Kinetic and Globalvia upped their bid despite the lack of an obvious opposing suitor, though it had previously been in somewhat of a bidding war to secure Go-Ahead.
Kelsian Group Ltd, an Adelaide-based ferry, bus, and light rail operator in Australia, Singapore and the UK, had interest in buying Go-Ahead but in July confirmed it would not make an offer.
Broker Liberum said: "This highly unusual move to increase the takeover consideration without a competing bidder validates our view that the original 1500p terms undervalued Go-Ahead.
"We suspect the consortium may have been nervous about the level of shareholder support for its deal and has sweetened the terms to obtain commitments from certain large holders."
The bid has "further reduced" the chances of a competing offer being made, Liberum added.
The consortium said that, in addition to the Go-Ahead board, its offer has received support from institutional investors Jupiter Asset Management Ltd, abrdn PLC, Schroder Investment Management Ltd and M&G Investment Management Ltd. Together, along with Go-Ahead's directors, this represents around 27% of Go-Ahead's share capital.
Liberum still has doubts about whether the bid amount is fair, however.
"Nonetheless, even the improved terms fall short of what we believe the group is worth," it said.
"There is still a slight possibility that the takeover may not be approved by shareholders. However, the irrevocable undertakings represent a very good start towards the required support of 75% of shares that are voted."
Go-Ahead shares were 0.3% lower at 1,534.00p each in London on Friday afternoon.
Investment Jefferies cut its recommendation for Go-Ahead to 'hold' from 'buy', as its shares now "reflect the offer value".
Its price target is 1,550p, the offer price, as part of its base case for the stock. The base case implies the offer is accepted and the deal closes.
An upside scenario would see a competing offer made for Go-Ahead. The Jefferies price target for the stock then would be 1,705p.
By Eric Cunha; [email protected]
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