(Alliance News) - Brave Bison Group PLC on Monday said it made an unsolicited offer for Mission Group PLC, to which the latter responded with a resounding rejection of the proposal that "significantly undervalues the group and its prospects".
The London-based digital advertising company Brave Bison said it made a formal approach to marketing services specialist Mission Group on April 29.
The combination would create "a scaled media, marketing and technology services company", Brave Bison said, with combined revenue for financial 2023 of around GBP120 million and pro-forma adjusted earnings before interest, tax, depreciation and amortisation of GBP14 million.
"The board of Brave Bison believes that a company of this size, scale and profitability would present a more attractive investment opportunity to institutional shareholders than either standalone company leading to the possibility of the enlarged Brave Bison trading at a higher multiple of earnings," the company added.
Executive Chair Oliver Green commented: "The combination of Brave Bison and Mission has the potential to deliver compelling value for both company's shareholders, clients and employees. We look forward to engaging with the board of Mission to discuss the merits of our proposal further."
A firm offer has yet to be made, which the company said remains contingent on Mission Group providing due diligence access to Brave Bison and expressing their support for the combination.
However, Mission Group responded on Monday, unanimously rejecting what it termed an "opportunistic" offer that "significantly undervalues the group and its prospects".
The offer, which comprised 11.5 Brave Bison shares for each Mission Group share, ascribes the company's shares a value of around 29.04 pence.
The offer would grant Mission Group shareholders a 45% stake in the combined entity, which the company believes "does not fully reflect the inherent value in Mission which...has been steadily improving reflected in a 62.1% increase in the Mission share price since October 23."
Mission Group added that the combination's structure would not reflect the parties' relative financial contributions.
Based on the pair's results in 2023, Mission Group said that it would contribute 81% of the combined group's revenue, around 71% of adjusted earnings before interest, tax, depreciation and amortisation, and 54% of adjusted pretax profit.
Mission Group also rejected the offer based on the proposed board composition, which would be headed up by Brave bison Chair Oliver Green and Director Theo Green, but would only see one additional non-executive director included from Mission Group.
Mission added that the offer would be earnings dilutive to its shareholders. While Brave Bison said that shareholders would benefit from a re-rating of the combined group, Mission Group pointed out that such a re-rating is not certain.
Mission Group ended its response by stating: "The board of Mission is open to proposals that it believes would enhance shareholder value and deliver benefits to Mission's shareholders. The board of Mission does not consider the terms of the possible offer to meet those criteria."
Shares in Mission Group were up 5.2% at 23.88 pence each in London on Monday.
Shares in Brave Bison were down 0.4% at 2.52 pence each.
By Hugh Cameron, Alliance News reporter
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Brave Bison (BBSN)
The Mission Group (TMG)