Tern PLC saw its shares drop as much as 15% after it announced a recommended £14.9mln all share offer for Pires Investments (AIM:PIRI) PLC.
The IT investment company will pay 0.51613 new Tern shares for each Pires share. Based on yesterday’s closing price of 15.5 pence per Tern share, the acquisition values each Pires share at 8.0p, a 54% premium to its closing share price of 5.2p, and the enlarged company at about £69.5mln.
Pires' portfolio generally comprises smaller shareholdings in its investee companies and is more diverse, whereas Tern has a more concentrated portfolio with larger shareholdings.
Tern said the acquisition would establish a company of greater scale and potential interest to institutional investors; provide investors with increased diversity of exposure to specialist technology businesses at different stages of development; as well as reduce costs.
Pires shareholders will own about 21.5% of Tern following the deal.
By mid-morning, Tern shares were down 12.9% at 13.5p, while Pires was up 13.5% at 5.9p.