CBG board accepts £5m offer from Giles
CBG GROUP, the Manchester-based insurance broker, has recommended an offer from competitor Giles Insurance Brokers to shareholders which values the business at £5.1m.
In a statement to the stockmarket last night, the boards of both firms confirmed they had agreed a deal at 32p a share, which is a 54.2% premium on the closing price of the company’s shares on the day before the deal was announced.
Giles Group said that it had already received acceptances from more than 50% of CBG’s current shareholder base for its bid, although the offer is conditional on Giles surpassing the 90% shareholder acceptance threshold which will allow it to take the business off the market.
CBG currently employs around 120 people at its headoffice in south Manchester and at bases in Blackpool and London. Giles Group is a private equity-backed broker with a network of 40 UK offices and more than 900 staff.
Both firms have pursued similar strategies in hoovering up smaller practices in a bid to be a consolidator in an industry which has become more tightly regulated. However, Giles Group, which is backed by London-based Charterhouse Capital, has found it easier to raise cash to fund deals than CBG, which has been hampered by a lack of interest in smaller, publicly-quoted stocks and a recent poor run of results.
Its turnover declined from over £11m in 2008 to to £7.7m last year, when it declared a pre-tax loss of £136,000. Meanwhile, Giles Group’s turnover has grown from £16.2m in 2006 to £60m in the year to August 31, 2010.
Robin Slinger, chairman of CBG, said: “CBG is pleased to announce that it will be recommending Giles’ offer for 32p per share to investors for consideration. The opportunity to become part of the Giles operation will inevitably provide significant growth potential for CBG in the coming years.”
“We’re confident that this deal will add considerable weight to Giles’ North West proposition, while also providing the company with access to niche sectors where CBG has demonstrated exceptional strength.”
Chris Giles, chief executive of Giles, said: “We see CBG as a strong strategic fit with the existing Giles business with significant opportunities for both businesses to grow and develop together and to leverage from a shared scale and market presence.
“The removal of the regulatory burden of being a listed company will allow the CBG team to focus on continuing to develop the business, and improve its operational performance through the infrastructure and operational efficiencies of Giles.
“The opportunity to expand in a core region is an exciting prospect for Giles and we are committed to exploring the opportunities ahead for both businesses.”
Manchester-based advisers include Zeus Capital Partners and Altium.
