8th Feb 2021 10:35
(Alliance News) - Arrow Global Group PLC on Monday responded to TDR Capital LLP's fourth potential takeover bid, this time accepted by the financial firm's founder and chief investment officer.
Shares in Arrow Global, a Manchester-based firm that buys debt from banks, credit card companies and telecommunications businesses, were up 25% at 289.00 pence in London on Monday morning.
"The board of Arrow Global is considering the proposal and a further announcement will be made in due course," the company said.
Arrow also noted that Zachary Lewy, Arrow founder and chief investment officer, has provided a binding letter of support to TDR. Lewy is also chief executive & chief investment officer of AGG Capital Management Ltd, a subsidiary of Arrow Global that operates as fund manager of the inaugural Arrow Credit Opportunities 1 Fund.
TDR has said Lewy "is fully supportive of the fourth proposal". The letter grants TDR exclusivity, and Lewy will not support any other offer for Arrow, TDR said.
Lewy currently has 501,663 ordinary Arrow Global shares registered in his name, representing a 0.3% stake, while his aggregate holding including directly and beneficially held shares is around 3.8 million shares or an approximately 2.1% stake.
Arrow Global said that Lewy "continues actively to discharge his duties and responsibilities in his existing role" both at Arrow Global and AGG Capital Management.
As at 31 December 2020, Arrow Credit Opportunities 1 Fund invested around 28% of its committed capital before recycled capital.
"Positive investment momentum continued into January and February. The investment pipeline remains very strong with attractive prospective returns on offer given the current environment and [Arrow Credit Opportunities 1] is well positioned to deploy capital quickly. Mr Lewy will not participate in the board's assessment of the proposal," said Arrow Global.
The company also stressed that there is no certainty of a firm offer being made.
TDR, a private equity firm, is offering 305 pence per share in cash, up from its most recent 290p per share offer, which had been rejected by Arrow's board back in January.
Before its third offer of 290p in January, TDR had made a 205p per share initial proposal back on December 2, followed by a 265p per share offer on December 8. All three offers were rejected by the Arrow board.
The new 305p per share offer is an approximately 67% premium to Arrow's 182.3p average share price for the three months ended Thursday last week, TDR noted, and a 36% premium to its closing price of 224.0p on Thursday. Arrow Global shares had added 3.8% on Friday to close at 231.50p.
TDR has until March 8 to makes a firm offer or announce its intention not to do so.
Jefferies highlighted that the deal is still only 3% higher than Arrow's share price levels in early 2020 and below the broker's own 420p per share valuation.
By Anna Farley; [email protected]
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