Tavistock Investments PLC (LON:TAVI) branded an approach by TEAM Plc regarding a potential all-share offer for the company as “significantly undervaluing” the business.
The transaction proposed by TEAM, a recently floated cash shell, would see shareholders receive 1 new TEAM share for every 45 Tavistock shares owned.
It equates to 2p per Tavistock share, providing zero premium to prevailing share prices.
Earlier this month, the company rejected a previous approach by TEAM.
Tavistock said the shell has a negligible track record of successfully acquiring and integrating businesses to create a larger group, adding the majority of TEAM’s shares have not traded and are therefore considered illiquid.
“The proposed offer continues to significantly undervalue the business that has been established by Tavistock,” the company said in a stock market statement.
“The board believes that a sum of the parts valuation of the Tavistock businesses, based upon industry standard matrices, would demonstrate that the true value of the company is several times higher than its current market capitalisation.”
“The board does not believe there to be any commercial logic or sufficient operational synergies that would justify a combination of the two businesses.
It added: “The board does not consider that a paper-only offer made using illiquid shares, that would represent over 50% of the offeror's then enlarged issued share capital, is credible or warrants further consideration.”