Shares in Panmure, whose name dates back 140 years, surged 76.47% to 105.0p in morning trading.
Diamond’s New York-based private equity firm, Atlas Merchant Capital, joined forces with QInvest, the Qatari investment bank, which already owns a 43% stake in Panmure, to buy the company.
Atlas will control a majority stake, with QInvest maintaining its existing stake.
The deal values the entire issued share capital of Panmure at about £15.5mln, the stockbroker confirmed in a statement today after reports emerged yesterday.
Under the terms of the acquisition, shareholders will receive 100p in cash for each scheme share, representing a 68.1% premium to Panmure’s closing price of 59.5p on Wednesday.
“Against the backdrop of a challenging macro-economic environment, with the resultant market volatility which has in recent years impacted Panmure Gordon’s business, the independent Panmure Gordon directors believe that the scheme price reflects a fair and reasonable offer,” said Panmure chairman Andrew Adcock.
“Accordingly, the independent Panmure Gordon directors unanimously recommend shareholders vote in favour of the scheme.”
Panmure will be delisted from the London stock market and taken private following the takeover.
Diamond moves on from Barclays…
The deal thrusts Diamond back in the London financial spotlight after he resigned as chief executive at Barclays following the scandal over the bank’s manipulation of Libor interest rates in 2012.
Barclays was fined £59.5mln by the Financial Services Authority for rigging Libor and Euribor rates.
It is understood Diamond will play no active role in Panmure’s activities and since he will not be in a regulated position he will not have to seek approval from the City regulator.
On today’s deal, the head of Diamond’s private equity firm Atlas in the UK and Europe, Matthew Hanson, said:
“We believe there is significant opportunity for Atlas, in partnership with QInvest, to apply our operational skills and financial services expertise to enhance Panmure Gordon’s strong reputation and build a larger, successful boutique investment bank.
“This long term stabilisation and development can only realistically be achieved as a private company, out of the glare of the public market and the effects of share price movement.”
The chief executive of QInvest, Tamim Al-Kawari, said it will maintain its stake in Panmure as a core shareholder. “We have been major investors in Panmure Gordon for more than seven years and are excited about this opportunity to work with Atlas to develop the business, alongside its management team and employees, and to assist it in fulfilling its potential.”
In a January trading statement, Panmure said it expects to return to full year profit and positive operational cash flow on the back of an increase in revenue to about £27mln from £23mln the prior year. It said trading for the year to 31 December 2016 has been in line with its expectations, with revenues weighted towards the second half.
Panmure’s chief executive Patric Johnson said: “Panmure Gordon has been very active for our corporate and institutional clients throughout 2016 despite the unpredictable political and macro-economic environment. Our pipeline for 2017 is strong and, notwithstanding an uncertain market with continued political and economic uncertainty, we look forward to 2017 with measured confidence.”
The company reported a 2015 loss of £16.7mln, reflecting macro economic headwinds, including worries over Brexit, and a goodwill impairment of £13.2mln. Its share price has plunged more than 60% over the past five years and has lost 95% in value since the 2008 financial crisis.
US interest rates driving M&A…
The prospect of rising US interest rates is driving merger and acquisition activity across the globe, according to Laith Khalaf, senior analyst at Hargreaves Lansdown.
The Federal Reserve on Wednesday raised benchmark interest rates by 25 basis points and said repeated its estimate for two more hikes this year and three more in 2018.
“I think what we are seeing is rising interest rates pushing M&A activity as we are coming to the end of the year because companies see it as the last chance to get access to cheap capital,” Khalaf said.
He referenced Kraft Heinz’s failed takeover attempt of Unilever, which fuelled speculation of potential M&As within the consumer goods sector elsewhere.
Khalaf said high yields in the US will have a knock on effect across the rest of the globe on yields on government debt, and by proxy, corporate debt.
– Updates share price, adds background, adds analyst comment –
Story by ProactiveInvestors