System1's board has unanimously rejected a third takeover offer from Brave Bison, which values the AIM-quoted market research firm at about £43.1m and comes from a bidder that already owns 28% of its shares. The board says the offer document carries no irrevocable undertakings or letters of intent from any System1 shareholder.
Brave Bison, the London-listed digital media and advertising group, is System1's largest shareholder. Having failed to secure a recommendation from the board, it has now put its terms directly to System1's other holders.
The latest offer is 135p in cash plus 2.04 new Brave Bison shares for each System1 share, with an all-share alternative of 3.36 Brave Bison shares. Together the terms value System1 at roughly £43.1m.
That structure has been the sticking point throughout. When Brave Bison revised its proposal at the end of July, the cash-and-share terms implied 321.7p per System1 share against a closing price of 345.0p on 29 July, a 6.8% discount. The all-share alternative implied 307.4p, a discount of 10.9%. A bid pitched below the market price offers no premium for control, which is unusual in a UK takeover.
The sequence began on 8 July, when System1 rejected an all-share proposal of 3.5988 Brave Bison shares per System1 share. A revised proposal on 13 July of 68p cash plus 2.7553 Brave Bison shares implied 317p and the same £43.1m headline. The board rejected that as well, saying it "materially undervalued the company and its prospects" and noting the terms carried no notable premium for control.
The board's position has not moved. It "continues to unanimously and unequivocally reject" the offers, saying they do not represent acceptable fair value for all shareholders. Canaccord Genuity is acting as System1's Rule 3 adviser, nominated adviser and broker.
One complication sits inside the register itself. John Kearon, who founded System1, holds 8% of Brave Bison following a share exchange in March, giving the founder of the target an economic interest in the bidder.
Brave Bison is arguing from momentum. Its first-half results showed net revenue almost doubling to £23.9m, adjusted EBITDA doubling to £4.5m and adjusted pre-tax profit up 120% to £4.1m. Executive chairman Oliver Green said the combination "is in the best interests of all Brave Bison and System1 shareholders" and pointed to "another period of momentum".
With 28% already secured and no board recommendation in prospect, the outcome now rests on whether Brave Bison can assemble acceptances from the remaining 72% at a price the board says is a discount.
Original source: BusinessCloud — https://businesscloud.co.uk/news/system1-rebuffs-latest-43m-brave-bison-takeover-bid/
