An ugly bid battle has exploded into the open as Science Group seeks to acquire engineering firm TP Group.
High-profile takeover talks involving the likes of Morrisons and Ultra Electronics have gripped the City this summer.
But the spotlight is now turning on the increasingly bitter spat between these two AIM minnows, which ratcheted up another gear yesterday as Science Group slammed TP’s board as ‘strategically myopic’ and weak.
Cold reception: TP advises the British Antarctic Survey on how to improve infrastructure in Antarctic
Science Group is a Cambridge consultancy offering a range of services, such as advising companies on the regulatory boxes they need to tick to bring their products to market.
It also has a division called Frontier Smart Technologies, which makes chips for DAB digital radios that are used in 50m devices worldwide.
Science Group, led by chairman Martyn Ratcliffe, has recently trained its eye on the smaller TP.
TP also has a wide remit, from making the hydrogen fuel cell systems to power the UK’s first hydrogen trains to running helicopter simulations and providing technical advice to the British Antarctic Survey on how to improve infrastructure in Antarctica.
It works in aerospace and defence too, with customers that includes BAE Systems, the European Space Agency, Babcock and the Ministry of Defence.
The takeover attempts and subsequent war of words have erupted in the space of a few weeks.
On August 9 Science Group bought into TP, scooping up around 10pc of the shares.
Buying a stake that big usually sparks off chatter about whether a takeover bid is in the offing. Sure enough on August 13 Science Group tabled a 5.8p per share offer for the company.
This was swiftly rejected by TP bosses, led by new chief executive David Lindsay, who claimed it was far too cheap and undervalued the company.
Chairman Andrew McCree branded it ‘opportunistic, conditional and unsolicited’ – and said the board had every faith that an overhaul Lindsay is to reveal at financial results next month would reinvigorate it.
Undeterred, Science Group then topped up its stake to 18pc and put forward a second bid – of 6.5p.
This valued TP at £51m and at around two-thirds higher than the price of TP’s shares before Science Group made any moves.
It declared that this was its final offer, which means that it cannot put forward a higher price or make a new bid for six months.
Science Group has since taken its stake to 21 per cent, and said it wants to unseat McCree and another TP director, while installing Ratcliffe and another appointee onto the board.
This is not too unusual in such a takeover tussle. But what has set it apart from the usual back-and-forths is how quickly the talks descended into vicious salvos being fired in public statements to the stock market.
On Monday, TP flatly rejected the second offer. Science Group yesterday responded angrily by saying its refusal to even engage in talks was ‘extraordinary in the context of the financial position of TP Group and the value deterioration presided over by the board in recent years’.
TP bosses, led by new chief exec David Lindsay (pictured), claim Science Group’s offer undervalues the company
Revenues at TP rose by 20 per cent to £59million in its latest financial year but losses spiralled from £2million to £10million, largely blamed on Covid.
Science Group also said TP’s claim that there would be no synergies – when parts of a business can be combined, saving money in the process – was ‘strategically myopic’.
It has also pointed out that its latest offer price is one that TP shares were valued at in a fundraising round back in 2017.
Companies rebuffing takeover deals almost always do it on the grounds that the offer is too low.
For example, FTSE 250 aerospace and defence group Senior knocked back five approaches from private equity predator Lone Star, making it one of the few companies to stand its ground in recent years.
But TP’s argument is not just to do with a general, post-pandemic rebound across the industries it works in.
The ‘opportunistic’ barb comes from the fact that Lindsay was only appointed on a permanent basis in July and is still reviewing the business before he unveils any grand restructuring proposals.
This means, TP’s backers would say, that Science Group is swooping while the company is somewhat in limbo.
TP has also referenced Science Group’s aggressive hostile takeover of Frontier Smart Technologies in 2019.
That became almost farcical amid accusations that there had been information leaks and claims that Frontier bosses would award themselves oversized bonuses.
Science Group shares closed flat at 460p last night while TP fell 1.7 per cent to 5.95p, significantly below the latest offer.
So far, Science Group has not launched a hostile takeover, nor has a one-off meeting to attempt to oust board members yet been confirmed or scheduled.
But it has said it will retain its shareholding as a strategic investment, ‘adopt an active engagement strategy’ and is not looking to sell its 21 per cent holding.
However the current spat goes, it might just be one battle in a much longer war.