Management has raised its offer for electronics payments company Alphyra less than a day after expressing confidence in its existing proposal, writes Dominic Coyle.
The timing of the decision to increase the bid for the company to €2.70 a share from the €2.45 on offer previously took markets by surprise.
Rendina, the company set up by the MBO team to conduct the deal, secured just 34.6 per cent support for its initial offer by the first deadline last Wednesday, including more than 12 per cent of the stock controlled by the management team and its backer, US venture capital house Benchmark Capital.
Sources close to Rendina had blamed the presence of rival private equity house First Data in the wings for its failure to secure more acceptances of its offer. However, on Thursday night, they expressed confidence in securing sufficient support for the deal by the next deadline, February 19th.
Less than a day later, the MBO consortium appears to have acknowledged by its actions that the original offer was pitched too low to win the necessary 80 per cent support from shareholders.
The new bid came despite the fact that there appears little chance of a rival bidder emerging following the departure of First Data. Since that time, Alphyra's share price has stayed stubbornly below the earlier offer level - trading at €2.35 in recent days. The shares jumped almost 12 per cent last night to €2.63.
When it was first mooted last November, the MBO team was understood to be offering around €2 a share. By the time an official offer was made, this had risen to €2.45.
Analysts had indicated that any offer for the company should be pitched above the €2.50 mark. That has now been breached and sources close to the bidders are confident that the latest move will secure sufficient backing from shareholders to make the offer unconditional.
"They could have waited until the second offer date but they decided they would be best going for the end game," said someone close to the MBO group.
The offer is still thought unlikely to please all investors, some of whom are confident that a bid of €3 or more is ultimately possible.
Independent director Mr Nicholas Koumarianos rejected suggestions that the sudden increase in the bid indicated that the original offer should not have been accepted, pointing out that the bid premium was reasonable when considered against other MBO offers in the market in recent times. "We are very pleased Rendina has made this improved offer ... resulting in a significant increase in value to shareholders."
It is thought that several major shareholders had indicated to the MBO team that they would not accept the €2.45 offer. Between them, these investors hold large enough stakes to frustrate the ambitions of Rendina.
