Shawbrook (SHAW) majority shareholder Pollen Street Capital isn't giving up its takeover bid easily. The private equity company - which has a 38.8 per cent stake in the challenger bank - has made a fourth and final offer for the shares. It has raised the terms to 340p a share, from the 330p it offered previously. Shawbrook's management continues to advise shareholders to take no action, because it believes the offer undervalues the banking group and its prospects.
The consortium bidding for the bank, Pollen Capital and BC Partners, said the offer is designed to give Shawbrook "two committed longer-term shareholders" with a two-to-four-year investment horizon. It said that while it was supportive of management, Shawbrook could benefit from more conservative growth targets than those set out at the March capital markets day in order to keep risk in check. However, Shawbrook's management thinks it "can continue to grow prudently over the medium term within its risk and return disciplines".
Pollen Street Capital has been an investor in Shawbrook since it was founded in 2011. It first approached the challenger bank in January when it made its initial 307p-a-share offer. On 2 June, it had received acceptances of 45.3 per cent, but requires 50 per cent to take control. The consortium also indicated that if it received more than 50 per cent acceptances, but less than 75 per cent, it may consider maintaining the bank as a publicly listed entity with a controlling stake. This would have implications for liquidity.
The revised offer represents a premium of 28 per cent to the share price on the day before the first offer being made in March. It also values the bank at 2.3 times its net tangible assets (NTA) at the end of December 2016. Analysts at Shore Capital have forecast NTA of 177.8p a share at December 2017, meaning the offer values the company at 1.9 times its forecast NTA. That's a premium to rival Aldermore (ALD) at 1.2 times, but a discount to OneSavings Bank (OSB) at 2.1 times.
