Senior PLC, the U.K.-listed maker of aerospace and automotive components, saw its shares rise 19% on Friday after announcing it had received multiple takeover proposals and suspended a planned share repurchase program.
The company said its board had earlier received a preliminary approach on January 14 which it unanimously rejected on the grounds that it materially undervalued the business and its prospects. In February, the same party submitted two higher proposals; the board rejected the second of those offers unequivocally.
Following those exchanges, Senior's board engaged financial advisers Lazard and Jefferies to open talks with a limited group of third parties about the possibility of a proposal for the company's entire issued and to be issued share capital. The company has since confirmed it received two further all-cash proposals from other potential offerors, describing these as superior to the earlier approaches. Discussions with potential offerors are ongoing, the company said.
As a direct consequence of the ongoing approaches and the company's regulatory obligations, the board has put on hold the launch of a previously announced £40 million share buyback that had been scheduled to start after publication of the full-year results. The board indicated it will keep the decision under review.
Senior is now in an "offer period" as defined by the City Code on Takeovers and Mergers. The Panel Executive has granted a dispensation from certain Code requirements, which means the company is not required to identify any potential offeror unless a party is specifically named in market rumor or speculation.
The company emphasized there is no certainty that any offer will ultimately be made, nor any certainty about the terms on which an offer might be made. The announcement was issued without the consent of any of the potential offerors, the company added.
What we know
- Senior PLC shares rose 19% on Friday following disclosure of multiple takeover proposals.
- A preliminary proposal received on January 14 was unanimously rejected for undervaluing the company; two higher proposals from the same party in February were also rejected, the second unequivocally.
- The board has appointed Lazard and Jefferies to engage a limited number of third parties regarding a possible offer for the entire issued and to be issued share capital.
- Two further all-cash proposals from other potential offerors have been received and are described as superior to earlier approaches; discussions continue.
- The planned £40 million share buyback that was to start after full-year results has been postponed and will be kept under review.
- Senior is in an offer period under the City Code; the Panel Executive granted a dispensation from certain Code requirements, and the company cannot guarantee an offer will be made.
Market reaction and context
The immediate market response was a strong intraday gain in Senior's shares following the disclosure of competing approaches and the confirmation that higher all-cash proposals had been received. The board's decision to pause its share buyback program reflects both the regulatory obligations that accompany takeover activity and the practical implications of negotiations for share capital management.
Facts only - the company made clear that no assurance can be given that an offer will materialize, and the announcement was made without the consent of any potential bidders.