Shares in alternative asset services provider Sanne (SNN) leapt 27% to 764.3p on Friday after it rejected a takeover approach from private equity firm Cinven.
Cinven confirmed it had made an all cash offer of 830 pence per share representing a 38% premium to yesterday’s closing price, which the board at Sanne has rejected.
The fact that the shares are trading higher suggests the possibility of a counterbid or interest from other parties.
ATTRACTIVE ATTRIBUTES
Numis analyst David Brockton thinks the business is attractive to private equity and trade buyers because of ‘its growing, low-risk and recurring income streams, which can also support high levels of leverage to enhance equity returns.’
Sanne’s shares have performed very well since coming to the market in 2015 at 200p, with a focus on providing administration services for asset managers.
The firm has historically been the acquirer as it looks to consolidate a highly fragmented market and completed five deals in 2020. In April the company raised £80 million to accelerate its growth plans through acquisitions.
Management has guided for double-digit organic growth over the medium term and operating margins between 28% and 30%.
Brockton concluded: ‘We have little doubt that private equity, deploying higher leverage, would be able to make a good equity return on Sanne.
‘We would also expect shareholders be able to make this return, albeit over a longer horizon.’