23rd Jan 2023 08:59
(Alliance news) - Funeral services profit Dignity PLC on Monday said its board has accepted a takeover offer from a consortium of existing shareholders, while also revealing a decline in revenue and operating profit last year.
Dignity and Valderrama Ltd said directors unanimously recommend shareholders vote in favour of a takeover offer by SPWOne V Ltd, Castelnau Group Ltd and Phoenix Asset Management Partners Ltd that values Dignity at GBP281 million, with an implied enterprise value of around GBP789 million when including Dignity's debt.
Valderrama is a newly incorporated private joint venture company which is jointly owned and controlled by SPWOne and Castelnau.
The offer by a consortium of the consortium, which already hold a 29% stake, is for 550 pence per share in cash, 29% higher to the closing price of 425.5p per Dignity share on January 3, the last business day before Dignity had announced talks for a potential offer.
Dignity shares rose 8.4% to 545.14 pence each in London on Monday morning.
The consortium also offered a share alternative to the cash offer, involving Valderrama and Castelnau shares.
In a separate trading update, Dignity said it expects underlying revenue to have shrunk to no more than GBP275 million in 2022 from GBP312.0 million the year before. Underlying operating profit is expected to be no more than GBP20 million, less than half of GBP55.8 million in 2021.
The poor performance was due to changes in pricing strategy and consumers opting for lower-priced products, in addition to an increase in Dignity's cost base. This was despite a "higher-than-average death rate persisting post-Covid 19", Dignity noted.
Dignity said it had GBP508.0 million in net debt at the end of last year, up form GBP417.2 million at the end of 2021.
By Tom Budszus, Alliance News reporter
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