Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
Check out our straightforward definitions of common legal terms.
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Access our unrivalled global news content, business information and analytics solutions
Insurance, risk and compliance intelligence using big data, proprietary linking and advanced analytics.
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
On 20 July 2020, M&G Investment Management, part of the FTSE 100 M&G group, announced on behalf of one of its funds that it had made several approaches to the board of UK Mortgages, for a cash offer of 67 pence per UKML share, the latest being on 15 July. The board of UKML have rejected all M&G’s approaches so far and have declined to enter into further discussion which may lead to a firm offer.
The latest approach values UKML at £183 million, representing a 21% premium on its closing price as of 17 July 2020, and a 36% premium on the 3 month volume weighted average price. UKML shareholders would also be entitled to a 0.375 pence per share dividend under the proposal. Despite the lack of cooperation from the UKML board, M&G believe the deal is ‘highly attractive and in the best interests of all UKML shareholders’. The bid was made public, to allow shareholders to see the merits of the possible offer and spark a dialogue with them.
M&G noted the ‘significant headwinds’ that the UKML is faced with, proposing that the possible offer would allow UKML shareholders an immediate exit, despite the illiquidity of UKML’s shares. M&G stated:
‘The volatility in the residential mortgage backed security markets and the deteriorating macroeconomic impact on asset quality are expected to continue to put pressure on the Company's long-term performance. MAGIM also believes that the impact of widening credit spreads and the weakening performance of UKML's underlying assets is not reflected in the Company's reported monthly NAV, given the accounting basis on which it is calculated, which makes it an inaccurate representation of the Company's true value.’
The fund manager further went on to state that, ‘given the continued uncertain outlook for the underlying assets in which UKML is invested, the sustained low level of returns of the Company and its structure as a listed investment company, UKML is unlikely to achieve an equivalent valuation for its shareholders and that an all cash offer at this level would provide UKML shareholders’.
UKML responded to the possible offer on 22 July 2020, confirming that having reviewed the offer, it was unanimously rejected on 19 July. UKML has confirmed it has received no further proposals since and is not in discussion with M&G at this time.
M&G had highlighted the company’s consistent struggle to deliver on dividends and returns, noting that the dividend had been cut to 0.375 pence per share for the third and fourth quarter of 2020, falling below the UKML’s already reduced minimum dividend target of 1.125 pence per share, per quarter announced in June 2019. However, UKML stated in its response that whilst it had reduced its quarterly dividend in anticipation of the government’s s COVID-19 mortgage payment holiday scheme, the previous level of 1.125 pence was to be restored when the period of market dislocation had settled. UKML confirmed that it reinstated the previous dividend policy after being advised that ‘the first cohort of mortgage payment holidays is now coming to an end and indications are that significant numbers of borrowers are recommencing payments’. The company also announced its intention to declare an additional interim dividend of 1.5 pence per share alongside the quarterly dividends of 1.125 pence per share.
The additional dividend payment impacts one of M&G’s conditions to the offer, stating that M&G reserve the right to reduce the offer in the event that the UKML board pays a dividend or any other distribution or return of capital to its shareholders. In this case M&G reserve the right to reduce the offer price by the amount payable.
UKML has urged shareholders to take no further action.
Market Tracker will continue to monitor this transaction as it develops.
Free trials are only available to individuals based in the UK
* denotes a required field
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.
0330 161 1234