It has been a tough year for recruiter InterQuest (ITQ). In the first half of 2016, the group was forced to book a non-cash impairment charge of £3.2m on its digital recruitment subsidiary, acquired in November 2013. It therefore swung into a net loss position at the half-year point and the shares fell two-thirds from their 2014 highs. Although full-year results in March suggested that the worst was behind it, investors have not been quick to forgive and shares have traded sideways so far in 2017.
When we reported on the half-year results back in September, we commented that the shares looked attractively valued at just five times forward earnings. The group's chairman, Gary Ashworth (who currently owns a third of the company), clearly agreed. He and the chief executive offer, Chris Eldridge, along with chief financial offer, David Bygrave, have formed a new company - Chisbridge - which has made a takeover bid for InterQuest. The group's independent directors have, however, spurned the 42p per share offer, stating it "materially undervalues the company and its prospects".
Mr Ashworth founded InterQuest in 2001 and floated it on the Alternative Investment Market (Aim) four years later with a share price of 55p. The group raised £3m at IPO and listed with a market capitalisation of £17m. InterQuest grew rapidly through acquisition in its early years on Aim and reached a share price high of 155p in February 2007. The group had paid a steadily increasing dividend every year until 2016, when it cut its annual dividend in half to 1.5p. The total payout since IPO is 19.5p a share.
At 42p, the offer from Messrs Ashworth, Eldridge and Bygrave is a mere 8 per cent premium to the closing price the day before the offer was announced. InterQuest's shares rose nearly a fifth on the back of the news of the potential takeover and now, at 46p, are greater than the offer.
