LONDON (Alliance News) - Cathexis UK Holdings Ltd on Friday said it has raised its cash takeover offer for construction services group ISG PLC significantly, following ISG's board having consistently reiterated its opposition to the first offer.
Cathexis said it has offered 171.00 pence per share in cash for ISG, significantly higher than the 143.00 pence per share it had made previously. The new deal values ISG at GBP84.6 million and is a 40% premium to its closing price on December 10, the day before the first offer was made.
ISG has consistently urged shareholders to reject the deal, saying it undervalues the business. In a later statement on Friday, the company said it would issue a formal response to the offer soon, but urged its shareholders not to take any action.
The offer had come after ISG has issued a trading update saying that while most of its units had performed in line, its UK construction business has continued to struggle from the effects of troublesome legacy contracts on its margins.
Due to a focus on clearing the decks of these contracts, ISG warned its UK construction arm would be loss-making in the year to the end of June, with some revenue pushed into the next financial year.
Cathexis already owns a 29.5% stake in ISG.
ISG shares were up 14% to 165.25 pence on the news.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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