System1 Group (LON: SYS1), the AIM-listed marketing and behavioural-science research company, said today its board unanimously and unequivocally rejects the unsolicited takeover offer from Brave Bison Group (LON: BBSN), a digital advertising and technology services company also listed on AIM.
System1 shares closed at 335.0p on Wednesday, within a 52-week range of 170.50p to 434.96p, and were last quoted at 338.5p yesterday, up 1.04% on the session. Brave Bison shares closed at 84.5p on Wednesday and were last quoted at 86.0p yesterday, up 1.78%.
Brave Bison first tabled its offer under Rule 2.7 of the Takeover Code, the formal notice that firms up a bid’s terms, on 30 July, proposing either 2.04 new Brave Bison shares plus 135p cash per System1 share, or an all-share alternative of 3.36 new Brave Bison shares per System1 share.
When Brave Bison posted its formal offer document on 27 August, the terms were unchanged, but its own falling share price had eroded the offer’s value. Using Brave Bison’s 26 August close of 84.5p, the cash-and-share offer implies just 307.4p per System1 share, an 8.2% discount to System1’s 335.0p close that day, while the all-share alternative implies 283.9p, a 15.2% discount. On 29 July, the same structures implied smaller discounts of 6.8% and 10.9% respectively — meaning the gap has widened, not narrowed.
The offer document also carried no irrevocable undertakings, binding promises from shareholders in advance to accept the bid, from any System1 investor. System1’s board said it does not view either structure as offering acceptable fair value and continues to reject both offers, working with advisers including Canaccord Genuity, which acts as System1’s financial adviser, Rule 3 adviser, nominated adviser and broker.
System1 said its formal response will come in an offeree board circular, its written reply to shareholders on the bid, which will also include the trading update originally expected in August. The offer remains live under Takeover Code procedure, leaving Brave Bison to justify a bid that has moved further from, not closer to, a premium.