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On 11 June 2021, Proactis Holdings plc (Proactis), the cash management software company, announced that it had reached agreement with Café Bidco Limited (Bidco), an indirectly owned company by Pollen Street Capital Limited (PSC) and DBAY Advisors Limited (DBAY), for a recommended cash offer for the entire issued and to be issued share capital of Proactis. This development follows from the previously reported story of the now withdrawn £71.6m offer announced on 30 April 2021 by PSC to acquire Proactis (see: Pollen Street Capital to acquire Proactis Holdings). The joint offer values Proactis at £74.9m on a fully diluted basis and the bidders will pay 75 pence per share, the same price per share as agreed upon by PSC in April. The joint offer also provides for a share alternative to the cash offer, whereby shareholders may opt to receive shares in Bidco in exchange for each Proactis share.
DBAY, the Isle of Man asset manager, is an existing shareholder of Proactis and increased its shareholding in Proactis from 19.31% to 25.54% following announcement of PSC’s April offer. PSC later announced on 28 May 2021 that it had entered into discussions regarding DBAY’s support for the offer, given that without its support, the offer (which is to be effected by way of scheme of arrangement) would not be approved by the requisite majority required (at least 75% of votes cast). DBAY indicated to PSC that it wanted to retain a meaningful interest in Proactis in the long term, provide ongoing support to grow the business and was unlikely to support PSC’s offer. However, both PSC and DBAY recognised the benefit to Proactis of their combined support and experience, and with the agreement of the Panel and Proactis board, agreed the terms of a joint offer structure which, excluding any alternative offer securities issued pursuant to the share alternative offer, will see PSC with a 65% shareholding in Bidco and DBAY with a 35% shareholding.
Since announcement of PSC’s offer in April, Proactis’ share price jumped by 77% from the price at the close of business of the announcement and, despite a dip down to 70.50 pence per share on 26 May 2021, has remained trading steadily at around 74 pence per share.
DBAY’s shareholding increase appears to echo a similar strategy recently employed by the company in its offer to Telit Communications plc (Telit), where DBAY increased its stake from 18.62% to 26.02% before the announcement of a recommended cash offer to acquire Telit on 25 May 2021 at £2.20 per share. Prior to the firm offer for Telit being made, Telit had been the subject of a potential bidding war in November 2020 (see: Foreign companies in UK shopping spree) which ended in the rejection of three possible offers by u-blox Holding AG (u-blox), Lantronix Inc. and DBAY. DBAY’s possible offer valued Telit at £1.95 per share and was initially rejected on the grounds that the board believed the offer to fundamentally undervalue Telit, although a higher offer by u-blox (valuing Telit at £2.50 per share) was also rejected by Telit on grounds that the offer would not ensure value creation for its shareholders. Interestingly, the board acknowledged that DBAY’s offer undervalued Telit and its longer-term prospects but gave its recommendation on the basis that the offer ‘represents an opportunity for Shareholders wanting to realise their investment in cash to do so at material premium to the historical share price of Telit’.
The offer represents a 58.5% bid premium in comparison to the closing price on 2 November 2020 (one day prior to the announcement of DBAY’s previous possible offer). The board did not give a recommendation as to the share alternative offered.
Market Tracker will continue to monitor these transactions involving DBAY as they develop.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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