Back in January, the management of challenger bank Shawbrook (SHAW) rejected a takeover approach from its largest investor Pollen Street Capital, which, at 307p, was deemed too low by other large investors. In March, Pollen Street raised its bid to 330p, which was once again rebuffed. But the bidco has since restructured the offer into a takeover approach which, despite being rejected by management, will go through if 50 per cent of the shareholders vote in favour.
But acceptances remain well below that threshold at about 43 per cent, according to a Numis note, even though Pollen Street owns just under 39 per cent of the shares. Investors - like management - clearly remain unimpressed with the offer, which values Shawbrook at just 10 times 2017 earnings or eight times 2018 earnings. Although the offer is a 20 per cent premium to the share price the day before the first bid was made, shares were trading above the offer price as recently as January 2016, the start of a year in which Shawbrook delivered a 29 per cent increase in underlying pre-tax profit.
The bidco's director, Lindsey McMurray, said the offer would provide "liquidity to those investors that seek it and create an ownership structure comprising long-term, supportive investors that will allow the company to adopt a more flexible approach to changing market dynamics". But management at the bank continues to believe that the deal's terms undervalue the business. Meanwhile, broker Numis suggested this week that the takeover would do little to help Shawbrook progress its own growth strategy.
