Challenger bank Shawbrook Group plc (LON:SHAW) has rejected an £825mln offer from a consortium of private equity firms.
The company said in a statement today that it would not recommend the 330p per share offer by Malin Bidco Ltd - a consortium comprising Pollen Street Capital and BC Partners - to its shareholders.
It is the third time Shawbrook has turned down the consortium.
The consortium initially put forward an offer of 307p per share for Shawbrook back in January before revising its offer to 330p on 6 March.
Shawbrook said since the consortium had left its offer price unchanged since the last bid was refused, it recommended shareholders reject the latest proposal.
However, the compamy acknowledged that the deal requires only 50% of shareholders to accept the offer, though it will remain listed if less than 75% agree to the bid.
The group said it will set out its views to shareholders on the deal in more detail in due course.
Earlier this month Shawbrook reported a 14.1% rise in full-year underlying pre-tax profit to £91.4mln, up from £81.0mln a year earlier.
In its outlook statement, Shawbrook said that “although there remains macroeconomic and regulatory uncertainty, the momentum we have seen in our results and the pipeline we continue to build for 2017 and beyond as we continue to invest in our platform gives confidence in our ability to continue to deliver strong and stable returns whilst we grow the business at a pace appropriate to market conditions as they unfold”.
Shawbrook was previously owned by Pollen Street, which until 2011 was part of Royal Bank of Scotland Group PLC (LON:RBS) known as RBS Equity Finance.
Pollen Street floated Shawbrook in 2015 at a price of 290p per share. The private equity firm placed a further 10% stake at 335p in November 15, and finally another 5.5% stake at 295.5p in May 2016. It currently owns 38.9% of Shawbrook.
Shares in Shawbrook traded below their listing price for much of last year following news in late June that that it had taken a £9mln charge for bad loans after it discovered some lending at its asset finance arm failed to meet its criteria.
Following news of the rejected bid, shares jumped 10.81% to 337.21p in afternoon trading.
Shore Capital welcomed Shawbrook's decision to decline the latest offer, saying it retains a positive stance with a 'buy' rating.
"We still think this represents a huge undervaluation, but given poor performance by management in defence so far, we would expect this to get done," ShoreCap analyst Gary Greenwood said.
"So 333p should be the go-to price, although we would expect the stock to trade at a discount in the short term."
-- Adds broker comment, updates share price --