Shares in Inspicio rose 18.5p to 219.5p this morning after its board recommended a £229m (US$470m) buyout backed by 3i.
The cash bid equates to 225p a share, a premium of 17.8% to the 191p price on October 11 when the support services company first said it was in talks. It is also above the 180p level at which the group raised £16m from shareholders in June.
Chief executive Mark Silver and finance director Richard McBride are leading the buyout with support from chairman Keith Tozzi. Silver and McBride will reinvest all their profits from the company sale back in the bid vehicle.
The majority of the offer, £167.4m, will come from new equity invested in the bid vehicle. The remainder, £61.6m, will be financed by a credit facility, consisting of senior debt and mezzanine, arranged by Barclays and SocGen. The total package will be £220m, of which most is earmarked for working capital.
Irrevocable support has been received from shareholders speaking for 20.2% of the company.
3i’s head of business services Alan Giddins said: “Business Services is a key sector focus for 3i and we are delighted to be in a position to invest in Inspicio.”
He added: “The underlying organic growth prospects for Inspicio remain strong. In addition, we are committed to supporting Inspicio’s acquisitive strategy to continue to build its international presence in its core markets.”
Independent director Lesley James said the board had also “evaluated proposals from a number of other potential bidders” and “concluded that the offer from 3i is in the best interests of Inspicio’s shareholders as a whole”.
Inspicio has made four acquisitions since joining AIM two and a half years ago. In the first half of this year it made a £3.1m pre-tax profit on £100.7m turnover.
Rothschild advised 3i with JPMorgan Cazenove acting as broker. Citi acted for Inspicio in both capacities and Kaupthing Singer & Friedlander provided a rule 3 fairness opinion to the board. Landsbanki and Altium also advised Inspicio.
Inspicio must pay £2.39m if it breaks the agreement.