Will Rees-Mogg step in to protect UK PLC? First test for the business secretary as a US buyout shark lashes out at British tech firm GB Group
The attack by US private equity on the London stock market continued unabated yesterday.
Little-known software company GB Group (GBG) became the latest target, confirming it is considering a cash offer from Chicago-based buyout group GTCR.
No price was announced but the Chester-based company was worth £1.32 billion yesterday after shares rose 24 per cent, or 125p, to 647p on the bid news.
New role: Business secretary Jacob Rees-Mogg must decide whether the software company GB Group can go into foreign ownership
A GBG spokesman said: “All proposals received will be evaluated by the board together with its advisers.”
The company has urged shareholders not to take any action.
GBG was founded in 1989 and has been listed on the London junior market AIM market since 2011.
It provides anti-fraud technology for clients such as fintech Revolut and skincare group Charlotte Tilbury.
GTCR has until October 4th at 17:00 to place an offer.
Should a deal be agreed, chief executive Chris Clark would walk away with £2million, while chairman David Rasche would pocket £4.7million.
The latest attack on the tech sector will test the mettle of the new regime at No10 as Liz Truss seeks to make her name in business after announcing Jacob-Rees Mogg as business minister.
Alasdair Young, Analyst at Panmure Gordon, said: “GBG is one of the UK’s best technology companies and the current valuation does not reflect the group’s potential growth and margins.”
GBG – which itself has had a heavy focus on acquisitions in recent years – reported sales of £242m on profit of £58m for the year ended March 2022.
GTCR, which closed a new £1.8bn ($2bn) growth fund in January, has raised more than £18bn ($21bn) in more than 250 companies since its inception in 1980 invested.
The UK tech sector has seen a number of companies targeted by private equity sharks in recent months.
In mid-August, US private-equity robber Thoma Bravo swooped down on cybersecurity firm Darktrace, sparking speculation in the City that the group could be taken off the market less than two years after its spring 2021 debut.
Analysts estimated that an offer of at least £4 billion would be needed for Darktrace investors to take it seriously. Shares soared after news of the potential takeover.
Chicago-based Thoma Bravo is also planning to open an office in London, his first base outside the US – a move that may indicate Darktrace won’t be his last UK destination.
And last month it was confirmed that French conglomerate Schneider Electric, the majority shareholder of FTSE 100 technology group Aveva – which provides software for controlling and monitoring oil rigs and nuclear power plants – was considering a takeover bid for the company.
Takeover activity resumed just two days later when software giant Micro Focus fell victim to a £5.1 billion bid from Canadian rivals Opentext.
Outside the stock markets, satellite company Inmarsat has also agreed to a £5.4 billion link with US rival Viasat, although the merger is under investigation by competition authorities.
Similarly, the £63million takeover of Welsh computer chipmaker Newport Wafer Fab by Chinese-controlled group Nexperia last year is under scrutiny on national security grounds, with some predicting the deal could be blocked.
That wouldn’t be the end of interest in Newport, however, as private equity firm Palladian and Irish tech investor Atlantic Bridge are believed to be among those looking to buy the company if Nexperia is forced to sell.
Covering the acquisitions will also provide some details on how Rees-Mogg intends to deal with the issue of companies falling into the hands of private equity or overseas competitors.
His predecessor and current Chancellor, Kwasi Kwarteng, was criticized for allowing several of the UK’s largest defense companies, such as Meggitt and Ultra Electronics, to be bought by foreign buyers and private equity raiders.
