The board of TI Fluid Systems will recommend to shareholders that they accept a Canadian competitor’s fifth offer to buy the company.
ABC Technologies, backed by Apollo Global Management and valuing the company at 200p per share, made an offer that the board “would recommend” to its shareholders. The London-listed firm’s shares rose by 19.45 percent or 29 1/2p, closing the day at 181 3/4p.
The board of TI Fluid Systems said that they were “confident” about the company as a stand-alone entity. However, the board was willing to support the ABC Technologies proposal, which represented a 51,9% premium over the share price prior to the announcement.
TI Fluid Systems, an auto parts manufacturer, makes fuel tanks and fluid-carrying system for cars. Bain Capital is a private equity firm that floated TI fluid Systems in 2017 at 255p a share.
Analysts at Deutsche Numis noted that Stellantis was TI Fluid Systems’ largest US customer, warning of financial weakness. Forvia, a French car part supplier, also recently stated that the production of cars in Europe could decline by 2025.
The company added: “Given this background and the increasing challenges of achieving the revenue target for 2026, a path to realising shareholder values should be considered compelling.”
Analysts from Investec stated: “We believe it is very likely TI fluid systems will agree a proposal in the next few weeks, and that the acquisition would be completed in due time. Although there have been no rumors about alternative interests, we cannot rule out a third-party interest.
We still believe there is a certain element of opportunism to this transaction given the low valuations for auto suppliers. This transaction shows that this sector is undervalued and offers a great opportunity for consolidation.
The M&A sector continued to grow in the third-quarter as businesses took advantage of an improved economic climate. Peel Hunt, an investment bank, said that there were 11 significant bids made in the third-quarter of the year. This brings the total for the year to date up to 40 with a value of £47billion. As bidders seek to secure listed assets, they have offered an average premium of 40%.
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