Kingswood Holdings Limited (LSE:KWG) shares fell 8.5% after the wealth manager revealed it is in advanced talks over a potential takeover that would see the business taken out at a discount to the current share price.
HSQ Investments, which already owns 68.4% of Kingswood, is considering an offer to buy out the remaining shares at 7p each - 1.5p below the current share price.
The company’s independent directors have indicated they would back the deal if it goes ahead.
Kingswood has struggled with rising debt, which has climbed from a net cash position of £39.7 million in 2021 to net debt of £48.1 million by the end of 2023. HSQ has continued to provide financial support, including £21 million in loans this year.
Without further backing, Kingswood warned it would struggle to meet its financial obligations. HSQ has made it clear it will only provide more funding if the company goes private.
HSQ has until April 9 to make a firm offer or walk away.