API board still urging caution over bid

THE independent directors of takeover target API Group have set out a detailed response to the recent takeover bid, and are still urging undecided investors to sit tight.

The AIM-listed company has received a 60p cash offer from shareholder Steel Corp which values the business at £46m. So far investors controlling 62% of the shares have accepted the offer from the US-based suitor, which has made its move through a company called Cedar Bidco.

In a letter to shareholders API’s interim chairman and chief executive Andrew Turner and non-executive director Andrew Walker accept the offer may be attractive to some  investors, but say they cannot yet recommend they accept it.

They say: “The independent board believes that the offer, at its current price, may not represent full value for the company and the potential returns for shareholders which may be generated from the board’s current plans for the business.

“On the other hand, the offer provides shareholders with the opportunity for an immediate and certain cash exit and, since Cedar Bidco has already secured acceptances giving it 62% of the API Shares, the alternative is to remain as minority shareholders in a company controlled by Cedar Bidco, which may subsequently be taken private.”

The directors and their advisers, Numis, have commissioned a valuation report on land in Rahway in the US to see if its potential sale could unlock better value for shareholders than the offer is providing.

The valuation report will be published as “soon as possible” they pledge.

In an update on current trading provided in the letter, the company said trading was continuing to be tough and the outlook for the full year is “now at the lower end” of the board’s range of expectations.

The letter concludes: “The independent board believes that there are important arguments for and against accepting the offer… which shareholders should consider carefully before making any decision.”
 
API employs more than 500 people in over 15 locations, including Salford and its HQ near Stockport.