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Key Takeaways:
- Fifth Offer Rejected: TI Fluid Systems has rejected five all-cash offers from ABC Technologies, the latest at 200 pence per share.
- Premiums Offered: The latest offer represents a 51.9% premium to the 90-day average share price and a 53.4% premium to the share price before the first proposal.
- Extension Granted: ABC Technologies now has until November 8, 2024, to make a formal offer or withdraw its bid.
On 14 September 2024, the Board of TI Fluid Systems (LSE:TIFS) announced that it had received and rejected a preliminary, non-binding all-cash proposal from ABC Technologies Inc. (TSX:ABCT), a company majority-owned by investment funds managed by Apollo Management IX, L.P. The proposal sought to acquire TI Fluid Systems at a price of 176 pence per share. This followed an earlier proposal by ABC Technologies at 165 pence per share, which had also been rejected.
ABC Technologies, undeterred by the initial rejection, submitted subsequent offers. These included an offer at 188 pence per share and a later proposal at 195 pence per share. Both of these offers were also rejected by the Board of TI Fluid Systems. However, after limited access to the company’s management, ABC Technologies submitted its fifth and most recent all-cash proposal on 10 October 2024. This proposal offered 200 pence per share and included several conditions, such as the successful completion of due diligence and the finalization of transaction documentation.
The latest proposal from ABC Technologies represents a significant premium over TI Fluid Systems' recent share prices. It offers a 51.9% premium to the 90-day volume-weighted average price of 131.7 pence, a 53.4% premium over the 130.4 pence closing price on 21 August 2024, and a 37.2% premium over the closing price of 145.8 pence on 13 September 2024, the last business day before the official offer period began.
Despite these substantial premiums, TI Fluid Systems remains confident in its current strategic direction. However, after careful consideration and consultation with its financial and legal advisors, the Board of TI Fluid Systems has indicated that if ABC Technologies makes a firm offer under the same financial terms as the most recent proposal, it would be inclined to recommend the offer to its shareholders.
To allow ABC Technologies to complete its due diligence, finalize financing, and negotiate the necessary transaction documentation, the Board of TI Fluid Systems, along with the UK Panel on Takeovers and Mergers, has granted an extension to the "Put Up or Shut Up" deadline. This rule, part of the UK Takeover Code, requires ABC Technologies to formally announce whether it intends to make a firm offer or to withdraw its interest.
ABC Technologies now has until 5:00 p.m. (London time) on November 8, 2024, to either announce its firm intention to make an offer or declare that it does not intend to pursue the acquisition. If no firm offer is made by that time, ABC Technologies will be bound by Rule 2.8 of the Code, meaning it would not be able to make another offer for TI Fluid Systems for a certain period unless specific conditions are met. The deadline can be extended further if the Board of TI Fluid Systems, with the consent of the Takeover Panel, agrees to do so.
At this point, there is no certainty that a firm offer will be made by ABC Technologies. TI Fluid Systems has assured the market that further announcements will be made as necessary.
ABC Technologies has reserved several rights under Rule 2.5(a) of the Code. These include the right to vary the form of the offer’s consideration, to lower the offer under certain conditions, and to adjust the offer if TI Fluid Systems announces or pays any dividends before the deal is completed.
