Saltus to Acquire Two Tavistock Subsidiaries in a Deal Worth Up to £37.75m

2 min read | October 01, 2024 03:57 AM PDT | By Team Kalkine Media

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Saltus to Acquire Two Tavistock Subsidiaries in a Deal Worth Up to £37.75m — Image source: Shutterstock

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Highlights:

Tavistock Investments will sell two subsidiaries to Saltus for up to £37.75 million, including an initial payment of £10.97 million.

The sale reflects a 211% premium on Tavistock's market capitalisation and requires shareholder and regulatory approval.

Tavistock plans to use the proceeds for working capital, potential acquisitions, and share buybacks, with no direct return of cash to shareholders.

Tavistock Investments (LSE:TAVI) announced on Tuesday its plans to sell two of its subsidiary businesses, Tavistock Partners Limited (TPL) and Tavistock Estate Planning Services Limited (TEPS), to Saltus Partnership Holdings. The deal, valued at up to £37.75 million, marks a significant shift for the AIM-listed company.

The agreement includes an initial payment of £10.97 million upon completion, with the potential for an additional £15.75 million in performance-related deferred payments. Tavistock will also receive £11.03 million to settle an intragroup debt between TPL and another subsidiary, TPUK. The total sale price reflects a 211% premium over Tavistock’s most recent market capitalisation.

The transaction is subject to shareholder approval, as required under AIM rules due to the fundamental nature of the business change, as well as regulatory approval from the Financial Conduct Authority (FCA). Tavistock has already secured support from shareholders representing 30.04% of its issued share capital, who have committed to voting in favour of the sale and a proposed share buyback authority.

The company plans to use the net proceeds from the sale for working capital, future acquisitions, and potentially share buybacks. However, Tavistock clarified that there are no plans for a direct return of surplus cash to shareholders. The board is seeking approval for the buyback authority, which would enable the company to repurchase its shares over the next five years if appropriate.

Tavistock’s CEO, Brian Raven, stated, "The disposal enables us to realise a substantial profit on our investment in the businesses involved, providing us with significant working and development capital. This will enable the continued reshaping of the group to optimise the balance between regulatory risk and commercial reward."

At 1021 BST, Tavistock’s shares surged 39.91%, trading at 3.01p following the announcement.

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