LONDON (Alliance News) - Xchanging PLC on Wednesday recommended an offer from FTSE 100 outsourcer Capita PLC that values it at GBP412 million, although the business technology and services provider is still in talks with investment manager Apollo Global Management LLC about a higher bid.
In a statement, Xchanging said it was recommending Capita's 160 pence per share bid in the absence of a higher bid as it wants to give its shareholders the chance to ensure a "minimum certain outcome". The potential offer from Apollo values Xchanging at 170p per share. The stock was last quoted at 164.00p.
The recommendation results in a clear regulatory timetable under City rules for Apollo to make a competing offer if it chooses to do so.
Xchanging said it made the announcement without the prior agreement or approval of Apollo.
Capita said it thinks the acquisition would position it as a top provider of technology-enabled business process services in the international insurance and asset administration industries. The outsourcer thinks the move would enable Xchanging to boost sales growth and to develop software, technology and procurement capabilities.
In addition, Capita said it would be able to secure a minimum of GBP35 million in "cost synergy benefits driven by head office, shared services and IT efficiencies" in the 2017 financial year, at a cost of about GBP20 million in the first 12 months after acquisition.
Capita wants to finance the deal with a bridging loan facilities until it can start a fundraising through a placing of new shares with investors.
The offer is not conditional on Capita's share issue.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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