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Against the backdrop of difficult market conditions and growing investor…
15/02/2012
“We are always in the business of maximising shareholder value,” Hans Hufschmid, GlobeOp CEO, told HFMWeek in June last year. “Right now we feel that’s best done by us growing the business organically. If at some point it might be best done by being acquired by someone bigger, so be it.”
Hufschmid’s assertion seven months ago, though not surprising, is instructive when looking to make sense of the current buy-out drama enveloping the administrator. GlobeOp’s share price, despite surpassing 460p on Monday, its highest level since the firm listed in 2007, had been disappointing for months before news of a potential takeover was revealed in January – shares changed hands for just 260p in October, less than half the valuation placed on the company by analysts.
Private equity firm TPG Capital’s 435p-per-share offer, agreed to by 44% of shareholders, therefore represents a substantial gain. And it remains the only bid on the table, despite rival provider SS&C’s declaration of interest late last week. But does it represent fair value?
Analyst Keith Baird of Oriel Securities called TPG’s offer “pretty much the bare minimum”, adding that a price around 500p would be fairer, given the company’s fundamentals. Some shareholders voiced their discontent at the $500m bid, which was labelled “disappointing” by Aviva Investors and “opportunistic” by JO Hambro Capital.
Shareholders will always want a higher price, but it is worth bearing in mind that just last summer analysts at Collins Stewart thought a 600p target price was feasible. Traders certainly think there is room for a higher bid, having pushed the share price well above TPG’s offer. This tale may have some way to run yet.
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31/05/2012
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