A brace of deal announcements today breathed new life into the City’s market for mergers and acquisitions, but also revealed a deepening trend for undervalued Londoncompanies to be snapped up by private equity firms.
Rising fintech star Network International Holdings was at the centre of a fresh, £2 billion offer from a second buyout suitor while smart metering firm Sureserve became the target of a £214 million offer.
There was talk that currency markets were encouraging international buyers to move fast. Joshua Mahony at Scope markets said: “This latest flurry of activity could be indicative of where asset managers believe the pound will go next. With sterling currently one of the best performing currencies of 2023, the bargains may not last for much longer.”
Network said Canada’s Brookfield Asset Management was offering 400p per share in a “highly preliminary” bid, more than the £387p on the table from a rival consortium of suitors made up by CVC Advisers and Francisco Partners Management.
Focused on the Middle East and Africa, Network processed payments worth over $42 billion (£34 billion) in 2021. It previously said it was “minded to accept” the lower offer.
Meanwhile, Dartford-based Sureserve, which installs energy smart meters, agreed a £214 million deal to be acquired by Cap10.
Cap10 pointed to the contractor’s “defensive foundations” as a reason for the bid, as funds look to strengthen their portfolios with companies that will continue to trade well in an economic slowdown.
Although the 125p-per-share offer is well above where Sureserve shares were trading when markets closed yesterday, Peel Hunt research analyst Andrew Nussey said the deal undervalued the firm. He said a rival bid could not be ruled out, though he noted that other possible suitors would have already had a chance to kick the tyres.
Shares in Network strode toward the new offer price, adding 35p to 395p. Sureserve gained 33p to 123p, just short of the price Cap10 agreed to pay. The pound was steady at $1.2407.
