RE: Capita loses £180m SATs contract to exam board Pearson22 Dec 2024 23:03
@SavageKeyboard '...either it'll be taken over, it'll go bust and the vultures will get to pick up the few good bits which remain or... AH will recognise it's too big a challenge and he'll seek out a merger.'
I have always viewed Capita as a possible/probable take-over target. AH has started the cost-savings, increased magins, invested in technology and AI, targeted sales etc. in a very short 12 months. AH's efforts means that Capita is leaner, fitter and stronger. Capita is far more of an attractive proposition and takeover target now, as alot of the hard work has been carried out. Capita is a far different company today (i.e. cost savings achived, better managed for profit etc.) than it was 12 months ago. In my view Serco is the obvious and natural buyer, and Capita will be a very nice 'bolt-on'. Much in the same way that Aviva bought Direct Line recently.
A buyout by Serco (market capitalisation £1.55 billion) of Capita (market capitaisation of a mere £243 million) makes alot of sense for both companies and shareholders alike. For Serco it is almost a no-brainer - the synergies, productivy, potential cost savings and efficiences, market dominance, and shareholder value are substantial.
If Serco made an offer for Capita, there would probably only need to be a couple of rounds of negotiation before a quick and easy deal was reached. I would say Serco would pay cash; or if need be to sweeten the deal - part cash combined with part Serco share deal would be acceptable to the Capita board. Either way, a Serco buy-out of Capita does make sense to me. If this were to happen, Serco would most likley keep AH and many other executives to ensure a smooth transition.
Do I personally care if a buy-out or merger takes place? No, not at all. AH has saved Capita (a ship that was listing badly) over the last 12 months. Over the next 12 months, Capita will become leaner, fitter, stronger, better and faster.
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