黑洞社区

Analysts have warned US investor Cathexis it is likely to fail in its drawn-out battle to acquire ISG, unless it ups its offer by at least 16% to 拢2 a share, equivalent to 拢99m in cash.

ISG鈥檚 board rejected Cathexis鈥� increased offer 鈥� of 拢1.71 a share, or 拢85m 鈥� last Thursday, arguing it 鈥渃ontinues to undervalue ISG and its future prospects鈥�.

Shareholders have until next Wednesday (17 February) to respond to the increased offer.

Cathexis鈥� original offer, made in December, was for 拢1.43 a share, or 拢71m in cash.

While Cathexis said its latest offer is 鈥渇inal鈥�, analysts told 黑洞社区 it left itself some wriggle room to make an improved bid.

Sam Cullen, analyst at Jefferies, said: 鈥淚 think they鈥檒l have to up it again. ISG鈥檚 management have made it quite clear they don鈥檛 want to sell. I think the offer has to be in excess of 拢2 and then people will be interested.鈥�

Tony Williams, analyst at 黑洞社区 Value, said: 鈥淚t鈥檚 not so long ago they were trading at 拢3.50 [January 2015]. But at 拢2 they would have gone.鈥�

In its rejection of the latest offer, ISG said it had taken into account recent trading issues in its UK construction business 鈥� which prompted a profit warning in December 鈥� but it was confident it could deliver its turnaround plans.

Cathexis argues ISG is better suited to private ownership rather than listing on the London Stock Exchange due to the volatile and cyclical nature of the construction market.

ISG鈥檚 share price was trading around the 拢1.71 mark on Monday.

As of last week, Cathexis owns or has support from shareholders equivalent to over 30% of ISG shares. It wants 50% support for the deal to seal the takeover, down from the 90% threshold it initially set.