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Northern Bear (LON: NTBR) has proposed a £9.1m tender offer at 132.5p a share, alongside interim results showing first-half operating profit halved to £2.1m. The AIM-listed group provides specialist building and support services from Northern England across the UK. Both announcements came before the market opened today.
A tender offer is a buyback at a fixed price. This one would take in up to 6,900,000 shares, 50.1% of those in issue, and the company would hold them in treasury rather than cancel them. Shareholders who tender could sell at least about 53.5% of what they offer, and the board makes no recommendation on whether to take part. The offer needs shareholder approval.
The price is an 18.8% premium to the 111.5p close on the latest practicable date before the announcement, and 15.0% above the three-month volume-weighted average price of 115.2p. The board said the current share price does not fully reflect the value of the business. Funding comes from a Virgin Money term loan and revolving credit facility of up to £6.5m, so the group would move from £4.8m of net cash at the 30th of September to pro forma net debt of about £4.7m if the offer is fully taken up.
The unaudited interims show revenue of £38.9m against £49.4m a year earlier, and a gross margin of 23.6% against 24.7%. The board said revenue and adjusted profits were in line with market and management expectations. The prior year included a £1.3m non-recurring profit, so adjusted operating profit slipped from £2.8m to £2.1m, and adjusted earnings per share from 14.6p to 11.2p.
Chief executive John Davies framed the period as one of resilience despite a tough backdrop.
The Group produced a resilient set of results in the Period, which has also seen continued investment in our operations with a view to supporting future growth despite the prevailing economic challenges.
John Davies, chief executive, Northern Bear
The board described markets as largely flat, with pressure starting to reach private-sector-dependent units such as Alcor and Arcas, and said it does not envisage any market uplift in the foreseeable future. It still expects the full-year outcome to be broadly in line with market expectations once the one-off profit is removed.
The offer closes at 1pm on the 1st of December, with the result due on the 7th of December and a general meeting to approve it on the 22nd of December.