Why The Mission Group rejected Brave Bison takeover bid, 13 May 2024 11:13

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Why The Mission Group rejected Brave Bison takeover bid

13 May 2024, 11:13

The Mission Group has unanimously rejected a takeover bid from rival Brave Bison / Image source: Adobe

Brave Bison made all-share bid
Approach deemed ‘opportunistic’
Board open to a higher offer

Shares in The Mission Group (TMG:AIM) were marked up 5.7% to 24p on Monday after the digital media-to-advertising minnow revealed it has rejected a takeover offer from Brave Bison (BBSN:AIM), a rival which snapped up the Steven Bartlett-founded social media advertising practice SocialChain in early 2023.

The bid for ‘Mission’ is the latest in a flurry of takeover offers that have heightened fears over an exodus from the London Stock Exchange including the junior AIM market.

OVERTURES SPURNED

On 29 April, Mission received an all-share unsolicited conditional proposal at an exchange ratio of 11.5 Brave Bison shares for each ordinary Mission share.

But on 8 May, the board unanimously rejected the proposal, valuing the business at around 29p per share, on the grounds it was both ‘opportunistic’ and ‘significantly’ undervalued the group and its prospects.

Mission also explained the mooted merger would be ‘dilutive to Mission’s shareholders as it does not reflect the relevant contributions of each party to the proposed combined group’, one that would boast revenues of roughly £120 million and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of roughly £14 million based on the latest results from the two companies.

Brave Bison chairman Oliver Green argued a tie-up with Mission had ‘the potential to deliver compelling value for both company’s shareholders, clients and employees’.

Yet Mission countered that the proposal, which would give its shareholders a rough 45% holding in the combined group, ‘does not fully reflect the inherent value in Mission which, post the impact of the 23 October 2023 trading update has been steadily improving’.

MARGINS UNDER PRESSURE

Shares in Mission have rallied more than 60% since 23 October, when they plunged by 60% after the group reported a whopping 95% drop in first half operating profit.

At the time, the company said margins had been impacted by ‘challenges in the US technology sector and the reduced level of activity in this market’, while cash-flow issues meant net debt more than doubled from a year earlier to £14.9 million, ‘driven predominantly by changes in client prepayment behaviour, closely linked to the tightening within the US tech sector’.

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In today’s update, Mission stressed it is ‘open to proposals that it believes would enhance shareholder value and deliver benefits to Mission's shareholders’, with the board adding stressing that it ‘does not consider the terms of the possible offer to meet those criteria’.

Shares in Brave Bison, which now has until 9 June to announce a firm intention on whether it will make another bid for Mission, cheapened 3% to 2.45p on the news.