Zeus Says Ashtead Technology Bid Likely to Be Accepted, Sees Room For Rival Offer

Zeus Capital believes Ashtead Technology (LON: AT) shareholders are likely to accept a 615 pence cash offer if US private equity firm Ember Infrastructure makes a formal bid. The broker also told investors in a note that a rival bid could come.

Ashtead revealed this week that it has received a possible offer at 615 pence a share from Ember, which Zeus said is reportedly the fourth unsolicited approach from the buyer.

Ashtead is giving Ember initial due diligence information, and Ember has until 5 pm on Oct. 21 to make a firm offer.

“If Ember does come out with a formal bid for Ashtead at 615p cash, we think this is pretty decent and, in the absence of any higher bid, likely to be accepted,” analyst Daniel Slater wrote.

The price is an 84% premium to the roughly 335 pence the shares traded at before the announcement. It is a 40% premium to the roughly 440 pence level before Ashtead’s recent profit warning. Zeus raised its price target for the stock to 615 pence from 560 pence.

Ashtead shares surged more than 41% to 507p on Thursday in reaction to the news.

Slater said Zeus would still buy the shares for the medium term even without a bid, expecting Ashtead to resume work in the Middle East.

In the short term, however, the firm stated thst Middle East situation could keep weighing on results, possibly into 2027. High oil and gas prices are also “making it more challenging to execute acquisitions.” As a result, Slater said investors may prefer to take the cash.

Zeus also pointed to the potential for a competing offer. Ashtead came out of private equity when it listed in 2021, and US private equity firms have often bid for UK-listed companies in recent years.

“We believe there is every chance of a counter bid,” Slater wrote. “Overall, while it would be a shame to lose another quality name from the UK listed oil services space, we believe it likely that a 615p cash bid for Ashtead would be accepted, were it to be confirmed.”