Auction Technology Group PLC (LSE:ATG) is facing pressure after investor FitzWalter Capital reiterated a 360p-a-share approach, a pitch that RBC analysts believe is likely too cheap for investors.
RBC Capital Markets said, in a note, that it does not believe such a deal will be palatable for shareholders.
Analyst Ross Broadfoot said many investors may, nevertheless, share FitzWalter’s frustrations with strategy and execution.
RBC said the board could mount a defence through better disclosure and a recovery plan that does not “primarily rely on macro-driven asset price increases”. It reiterated its view that a capital markets day is required.
It wants details on the mix of timed auctions, auction house client numbers and churn, seasonality in key KPIs, the drivers of value-added services such as shipping, and average lot values.
Broadfoot said FitzWalter is unlikely to materially increase its bid. ATG traded at 348p in September and 342p in October. RBC said that could imply earlier bids were already at higher levels than 360p.
RBC highlighted FitzWalter’s references to “non-credible” alternative buyers and its view that the board “are not valid representatives of shareholders”. It also flagged comments on potential asset sales as new.
The Canadian bank rates the shares Sector Perform and targets 310p.