(Alliance News) - UK Mortgages Ltd on Thursday said it has rejected the final takeover offer made by M&G Investment Management Ltd, 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.
On Thursday, M&G - acting on behalf of its M&G Specialty Finance Fund - said it has 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 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, 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 1.5% higher at 64.20p each on Thursday afternoon in London. Shares in M&G were up 1.5% at 184.03p each.
By Ife Taiwo; ifetaiwo@alliancenews.com
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M&G (MNG)