Digital marketer MISSION Group (LSE:TMG) has rejected a possible all-share bid from fellow small cap marketer Brave Bison (AIM:BBSN).
The proposed deal values MISSION shares at 29.04p apiece, compared to a closing price of 22.7p at the end of last week, based on an exchange ratio of 11.5 BB shares for each ordinary share in MISSION.
MISSION said it received the unsolicited conditional proposal regarding a possible offer on April 29 and unanimously rejected it last Wednesday, May 8, which it "believes to be opportunistic and significantly undervalues the group and its prospects" as well as being dilutive to its shareholders.
MISSION's share price had fallen over 70% in the past three years to a low of 10p in the autumn after it sounded the earings alarm and cancelled its dividend in the face of difficult trading conditions.
Its board believes that the offer and resultant 45% ownership by its shareholders in the proposed combined group "does not fully reflect the inherent value" in the company, which it says has been "steadily improving" since the October profit warning, and noting that it would contribute approximately 81% of revenues, 71% of adjusted EBITDA and roughly 54% of adjusted pre-tax profits to the proposed combined group.
MISSION said an additional possible equity fundraising of at least £10 million that BB is considering to accelerate debt repayment and strengthen the balance sheet of the proposed combined group would be further dilutive to its shareholders' interests.