ISG (ISG:AIM), London's leading office fit-out business, is forced to backtrack on claims it made in a letter to shareholders which encouraged them to reject a takeover offer.

The circular issued by ISG's board included comments that could be construed as profit forecasts, triggering regulatory requirements including the publication of independent reports from accountants, financial advisers and a statement by its board.

A replacement document is being posted to shareholders which excludes implied forward price-to-earnings ratios of the company and its peer group in order to comply with the Takeover Code.


ISG's board maintains the 143p a share bid from private equity firm Cathexis, close to the lowest ISG has traded in 2015, does not reflect the value of the business.

Cathexis, which owns 29.5% of ISG, wants to take the business private or acquire a majority stake.

It says ISG's volatile operating performance, a loss-making construction unit and reliance on contracts from one large customer means the bid is fair.

On a website detailing its bid for ISG, Cathexis has published a document from Altium, a small London-based investment bank, which intends to accept the offer. The size of Altium's shareholding is not known, though appears to be below the 3% disclosure threshold.

Supporting ISG's board, major shareholders Octopus and River & Mercantile (RMMC) which together represent around 14.5% of ISG's share capital have signaled they oppose the deal through 'letters of intent'.

ISG has a market capitalisation of £70 million and delivered a £30 million pre-tax profit last year, excluding a struggling construction unit.

Excluding the construction unit, that puts ISG's core office fit-out business on a trailing, pre-tax price-to-earnings ratio of 2.3, according to our calculations.

Operating losses in the construction unit were £18.1 million.

Issue Date: 30 Dec 2015