CBG Group receives £5m takeover approach
CBG Group has confirmed that it has received a takeover approach from Glasgow-based Giles Insurance Brokers.
Wythenshawe-based CBG, which employs around 100 people, issued a statement to the stockmarket yesterday evening confirming the approach, which it said “may or may not lead to an offer for the company”.
The offer is for 32p a share, which was a 54.2% premium on yesterday’s closing price. It values CBG at just over £5m. By lunchtime today (June 20), the company’s shares were up by 37.5% to 28.5p.
Giles Insurance Brokers has pursued a similar strategy to CBG Group in hoovering up smaller practices in a bid to be a consolidator in a fragmented industry.
However, the business, which is run by chief executive officer Chris Giles, has done this using private equity capital (it is majority owned by London-based Charterhouse Capital Partners) rather than using shares as capital.
This has meant that it has been easier to fund deals at a time when raising cash for acquisitions has proved difficult for smaller companies on public markets. Its turnover has grown from £16.2m in 2006 to £60m in the year to August 31, 2010, and in December it completed its biggest deal to date when it acquired healthcare insurance specialist RA Rossborough, which is based on the Channel Islands.
The acquisition created a group which employs 1,000 people and places £300m worth of insurance premiums a year.
Meanwhile, CBG Goup’s last full-year figures for 2010 show a 14% drop in turnover to £7.7m and a pre-tax loss of £136,000.
Its share price has also declined from a peak of 190p in October 2007 to close at just over 21p yesterday, giving it a market capitalisation of around £3.35m.
