- Cash offer of £543m is 48 per cent premium to Friday’s close
- Take-out price of 595p marks near five-fold return since 2014 IPO
The board of Aim-listed IMImobile (IMO) has recommended an all-cash 595p-a-share bid from US tech giant Cisco (US:CSCO), in the latest in a rash of takeover offers for UK stocks.
With 54.5 per cent of shareholders – including Liontrust, Hargreave Hale and Octopus Investments – having already signalled their favour for the offer, the cloud communications software group looks set to exit the junior market, assuming regulatory clearance is granted.
The £543m acquisition price represents a 51.6 per cent premium immediately prior to Cisco’s initial approach on 2 November, and is 47.8 per cent above Friday’s closing price
IMImobile chairman John Allwood said the deal was “in the best interests of all stakeholders in IMImobile” and will allow shareholders “to realise significant and immediate value, whilst enabling the long term success of the business". If accepted, the bid represents a five-fold return for any investor who bought into the group’s initial public offering in 2014.
Prior to the offer, analysts expected net income to climb to £14.2m for the 12 months to March 2021, equivalent to earnings of 17.1p per share. That marks a healthy forward price-to-earnings multiple of 35, or almost double the five-year average, according to FactSet. In the half-decade to March 2020, the group also saw Ebitda rise from £1.9m to £18.6m, equivalent to a compound annual growth rate of 58.3 per cent.
“The deal shows that there is significant value left in some UK tech assets, which has not rallied as strongly as the US,” said Dan Ridsdale, managing director of technology and platform, Edison. “The healthy premium reflects in part that the valuation has lagged many of its tech peers and the strategic fit with Cisco’s strategy.”
The news landed as IMImobile unveiled interim results for the six months to September, which showed a 9 per cent contraction in revenues and net cash of £2m following a £22.2m share placing at the period end.
It also comes less than a week after fellow Aim traveller Nucleus Financial Group (NUC) confirmed two separate takeover proposals from peer IntegraFin (IHP) and James Hay Partnership, the latter of which is private equity backed. The counterparties have until next week to make an offer, though Nucleus’ shares climbed to a year-high of 185p on the news.
As with IMI, investors should await documents – or a better bid.
IMImobile last IC View: Buy, 336p, 28 Jul 2020
Nucleus Financial last IC View: Buy, 136p, 9 Sep 2020