(Alliance News) - M&G Investment Management Ltd on Friday said it is no longer interested in buying UK Mortgages Ltd.
UK Mortgages, on Thursday, rejected the final takeover offer made by M&G Investment Management, stating that it believes the offer undervalues the company and its prospects.
M&G Investment Management is an asset manager and part of M&G Group. Both M&G Investment Management and M&G Group are fully owned subsidiaries of M&G PLC, the FTSE 100-listed international savings and investment business.
In a statement Friday, MAGIM confirmed it will not make another offer for UK Mortgages, blaming the "absence of board engagement and corresponding access to due diligence".
"MAGIM is disappointed with the immediate rejection of its increased offer announced on August 13 by the board of UKML," the investment manager said.
M&G continued: "MAGIM does not believe this allowed all shareholders sufficient time to evaluate the offer and provide feedback to the board, or for the board to proactively canvass this feedback. MAGIM continues to believe that its offer represented the best opportunity for shareholders to exit at an attractive price without delay or the uncertainty from UKML's Review of Future Strategy announced on August 7."
On Thursday, M&G - acting on behalf of its M&G Specialty Finance Fund - had increased its takeover offer by 3 pence to 70p per share, valuing UK Mortgages at around GBP191 million. It stated that the offer represents a 26% premium on UK Mortgages' closing share price of 55.5p on July 17 which was the last full day of trading before its initial takeover announcement on July 20.
M&G accused the UK Mortgages board of "refusing to engage" with its takeover bid and said the increased offer marked a "final attempt".
"M&G strongly believes that its increased and final all cash offer would provide UK Mortgages Limited shareholders with an immediate cash exit at a highly attractive premium," the asset manager previously said.
It added that it would reduce its offer to 68.5p per share if UK Mortgages Limited paid out its proposed interim dividend of 1.5p per share before completion.
However, UK Mortgages' Chair Chris Waldron responded Thursday, stating: "The board considers that the final possible offer continues to be an undervaluation of the company and does not believe this valuation is recommendable. In addition, the board reiterates its intention to launch a review of future strategy with the aim of maximising value delivered to shareholders."
Earlier in August, the closed-ended investment company said it would launch a strategy which would seek to maximise value, provide pathway to enhanced liquidity, and narrow or remove share price discount to net asset value. It added that the review "would not consider a formal sale process" or merger.
UK Mortgages shares were trading 2.3% lower at 63.50p each on Friday afternoon in London. Shares in M&G were down 1.4% at 179.60p each.
By Paul McGowan; paulmcgowan@alliancenews.com
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