(Alliance News) - ClearStar Inc said Wednesday it has agreed to a GBP14.7 million takeover offer from Hanover Bidco 1 Ltd, an investment vehicle owned by Hanover Active Equity Fund II.
Under the acquisition's terms, Hanover will acquire ClearStar for 40 pence per share, reflecting a premium of 23% to the company's closing price of 32.5p on Tuesday.
Shares in the background and medical screening firm were 20% higher at 39.00 pence on Wednesday in London.
The acquisition is conditional on gaining at least 50% in shareholder approval at an upcoming general meeting. However, already Hanover has obtained irrevocable acceptances for around 20.2 million shares, reflecting 56% of ClearStar's entire issued share capital. The long-stop date for the acquisition is the end of December.
Also on Wednesday, ClearStar reported a widened loss for the first half of 2020, as revenue declined on reduced screening volumes due to the Covid-19 pandemic.
For the six months to the end of June, ClearStar's pretax loss widened to USD1.2 million from USD914,000 the year before, on revenue that declined by 23% to USD8.9 million from USD11.6 million.
Sales from direct services declined by 29% to USD3.0 million from USD4.2 million as a result of lower screening volumes. Revenue from Medical Information Services declined by 20% to USD4.0 million from USD5.0 million.
Looking ahead, sales for August reached the same level as August in 2019, following a sustained improvement in run rate since the end of May. Revenue recovery has mainly come from new activity with customers with increased requirements due to the pandemic.
However, ClearStar remains cautious on its near-term outlook, due to continued uncertainty around the length of the pandemic.
"With the outbreak of COVID-19 and consequent widespread freeze on recruitment, our volumes were substantially reduced in March and April. However, from the end of May we have achieved a significant uptick in revenues - increasing month-on-month - and in August returned to our run rate of last year," said Chief Executive Officer Robert Vale.
"We have continued to be able to service our customers throughout the period as well as win new business and launch new services. This reflects our resilience and ClearStar's strong fundamentals with the necessity of employers taking action to protect the safety of their workforce and customers never being more apparent," Vale added.
Commenting on the board's decision to accept the takeover offer from Hanover, Chair Barney Quinn said: "Up until the outbreak of COVID-19, ClearStar had a good start to the year, and then saw excellent improvement from May onwards following the significant impact on revenues in March and April. However, we have not yet seen a return in much of our traditional business and the ongoing challenges created by the pandemic means that there remains significant near-term uncertainty.
"The Hanover offer provides us with the financial certainty to continue building our business and enable our employees to play a major role in transforming our industry for the benefit of our customers."
By Dayo Laniyan; dayolaniyan@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.