Will Rees-Mogg step in to protect UK PLC?
As US buyout shark swoops on British tech firm GB Group...
US PRIVATE equity’s onslaught on the London stock market continued apace yesterday.
Little-known software company GB Group (GBG) became the latest target, confirming it is considering a cash offer from Chicago-based buyout group GTCR.
No price was revealed but the Chester-based company was worth £1.32bn yesterday after shares soared 24pc, or 125p, to 647p on the bid news.
A GBG spokesman said: ‘Any proposals received will be evaluated by the board together with its advisers.’
The company has urged shareholders to take no action.
GBG was founded in 1989 and has been listed on London’s junior market AIM market since 2011.
It provides fraud protection technology for customers including fintech firm Revolut and skincare group Charlotte Tilbury.
GTCR has until 5pm on October 4 to make an offer.
Should a deal be agreed chief executive Chris Clark would walk away with £2m, while chairman David Rasche would pocket £4.7m.
The latest assault on the tech sector will test the mettle of the new regime in No 10 as Liz Truss looks to make her mark on the economy, after announcing Jacob-Rees Mogg as Business Secretary. Alasdair Young, analyst at Panmure Gordon, said: ‘GBG is one of the UK’s best tech companies, and the current valuation does not reflect the potential growth and mar- gins of the group.’ GBG – which has been on a heavy acquisition drive itself in recent years – reported revenue for the year ended March 2022 of £242m with profits of £58m.
GTCR, which closed a fresh growth fund of £1.8bn ($2bn) in January, has invested more than £18bn ($21bn) in more than 250 companies since its inception in 1980.
The UK tech sector has over the last few months seen a raft of firms targeted by private equity sharks.
In mid-August, US private equity predators Thoma Bravo swooped on cyber-security firm Darktrace, sparking speculation in the City that the group could be taken off the market less than two years after its debut in spring 2021.
Analysts estimated that a bid of at least £ 4bn would be required to be taken seriously by Darktrace investors. Shares have soared following news of the possible takeover.
Chicago-based Thoma Bravo is also planning to open an office in London, its first base outside the US – a move that could indicate Darktrace will not be its last British target.
And last month it was confirmed French conglomerate Schneider Electric, the controlling shareholder of FTSE 100 tech group Aveva – which provides software to control and monitor oil rigs and nuclear power stations – was considering a buyout bid for the firm.
The takeover activity continued just two days later when software group Micro Focus fell prey to a £5.1bn bid from Canadian rival Opentext.
Outside of the stock markets, satellite firm Inmarsat has also agreed to a £5.4bn tie-up with US rival Viasat, although the merger is being investigated by competition regulators. Similarly, the £63m acquisition last year of Welsh computer chip maker Newport Wafer Fab by Chinese-controlled group Nexperia is being probed on national security grounds, with some predicting the deal could be blocked.
But this would not be the end of the interest in Newport, with private equity firm Palladian and Irish tech investor Atlantic Bridge thought to be among those looking to buy the firm if Nexperia is forced to sell.
The treatment of the takeovers will also provide some details on how Rees-Mogg intends to handle the issue of companies falling into the hands of private equity or overseas rivals.
His predecessor, and now Chancellor, Kwasi Kwarteng was criticised for allowing several of the UK’s major defence firms such as Meggitt and Ultra Electronics to be bought by overseas buyers and private equity predators.
‘One of the UK’s best tech companies’