Funeral services profit Dignity PLC on Monday said its board has accepted a takeover offer from a consortium of existing shareholders, while also revealing a decline in revenue and operating profit last year.

Dignity and Valderrama Ltd said directors unanimously recommend shareholders vote in favour of a takeover offer by SPWOne V Ltd, Castelnau Group Ltd and Phoenix Asset Management Partners Ltd that values Dignity at £281 million, with an implied enterprise value of around £789 million when including Dignity’s debt.

Valderrama is a newly incorporated private joint venture company which is jointly owned and controlled by SPWOne and Castelnau.

The offer by a consortium of the consortium, which already hold a 29% stake, is for 550 pence per share in cash, 29% higher to the closing price of 425.5p per Dignity share on January 3, the last business day before Dignity had announced talks for a potential offer.

Dignity shares rose 8.4% to 545.14 pence each in London on Monday morning.

The consortium also offered a share alternative to the cash offer, involving Valderrama and Castelnau shares.

In a separate trading update, Dignity said it expects underlying revenue to have shrunk to no more than £275 million in 2022 from £312.0 million the year before. Underlying operating profit is expected to be no more than £20 million, less than half of £55.8 million in 2021.

The poor performance was due to changes in pricing strategy and consumers opting for lower-priced products, in addition to an increase in Dignity’s cost base. This was despite a ‘higher-than-average death rate persisting post-Covid 19’, Dignity noted.

Dignity said it had £508.0 million in net debt at the end of last year, up form £417.2 million at the end of 2021.

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