- Takeover by Pollen Street Capital
- Premium of 34% to undisturbed price
- Suitor sees accelerated growth
Wealth manager Mattioli Woods (MTW:AIM) became the latest UK mid-cap to be targeted by private equity as the board unanimously recommend an all cash 804p per share offer from Pollen Street Capital.
The proposed deal equates to a 34% premium to the undisturbed share price and values the ordinary share capital of Mattioli Woods at around £432 million.
Shareholders are also entitled to the previously declared interim dividend of 9p per share if they were on the share register on 16 February.
The shares jumped 32% to 790p, just shy of the offer price, suggesting investors believe the deal will be voted through.
ARE UK COMPANIES SELLING THEMSELVES SHORT?
There is an argument for investors holding out for more. After all, the offer is 10% shy of the all-time high achieved in 2021 and the premium looks a bit light against an average premium of around 50% seen over the last year according to analysis by Peel Hunt.
The cheapness of the UK market and increasing interest from trade and private equity suggests sellers should be asking for higher prices, if that is a route they wish to explore.
The board meanwhile believes the offer is ‘fair and reasonable’ and intends to unanimously recommend the proposed deal, with directors controlling roughly 6.2% of outstanding shares expected to vote in favour.
WHY IS THE COMPANY SELLING?
Mattioli Woods’ directors believe Pollen Street Capital brings ‘significant’ financial and strategic resources to accelerate the company’s growth plans.
The directors said growth would be slower and less certain without ‘considerable’ further capital funding, which would be difficult to raise in current markets without ‘materially’ diluting shareholders.
The company has played its part in the rapid consolidation of the wealth management industry driven by scale and technology.
Arguably Mattioli Woods has been a success story since listing on AIM in 2005, with the shares up five-fold equivalent to a compound annual growth rate of 10% per year. That excludes dividends which have grown around 10% a year over the last few years.
It will be interesting to see if long term shareholders in the company back the proposed deal or provide some pushback.
