Good morning!

Today we have a bombshell offer for Premier Technical Services (LON:PTSG) at 210.1p. The stock closed last night at 87p.

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Premier Technical Services (LON:PTSG)

  • Share price: 205p (+136%)
  • No. of shares: 126 million
  • Market cap: £259 million

Recommended Cash Acquisition

PTSG has been covered very recently in this report.

According to the archives, most of the commentary around these parts has been thanks to Paul. I've not said too much about it, though like Paul I've been sceptical:

  • March 2017 (107p) - saw a lot of complexity in the accounts, and negative net tangible assets. Thought that the company had a lot to prove to justify a high earnings multiple.
  • 7 Aug 2017 (144p) - wary of valuation relative to the quality of the business. 
  • 21 Feb 2019 (119.5p) - explained that it was not the type of thing I would invest in personally, but also guessed that the recent, sharp deterioration in the share price was probably nothing more than short-term noise.

It turns out that I should have been more interested. The acquisition is priced at a:

  • 145% premium to yesterday's closing price
  • 72% premium to the volume-weighted price over the last twelve months.

There is a wall of text which I won't bore you with - basically, the CEO and MD plan to reinvest some of their sale proceeds back into the company, after the takeover. Rather than disposing of their shares and retiring, they will stick around to run the company under its new owners.

48% of shares eligible to vote the deal through have promised or declared an intention to vote in favour of the deal. It is therefore very likely to be voted through.

The Buyer

The buyer is Macquarie Principal Finance. They will use a combination of their own cash and debt financing (typical for private equity deals).

The Macquarie Senior MD has summarised it on LinkedIn today:

Deal announced! Pleased to announce a…

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