黑洞社区

US investor Cathexis is getting a good deal for UK builder ISG with its 拢85m takeover, according to analysts.

The US firm is likely to refocus ISG on its core fit-out business before attempting to sell it on for a profit within five years, analysts have said.

Cathexis triumphed in its 10-week battle to buy ISG last Wednesday, with its second improved offer of 拢1.71 per share, or 拢85m. The firm had previously failed with a 拢1.43 a share, or 拢71m, bid in December.

ISG鈥檚 board had repeatedly rejected Cathexis鈥� takeover approaches before performing a dramatic U-turn last Wednesday morning, approving the deal once it became clear Cathexis was on course to reach the 50% threshold required to take the deal unconditional 鈥� which it duly did later that day with 58% support.

Analysts told 黑洞社区 two ISG profit warnings in 2015 caused by problem jobs in its new build construction arm softened the firm up for a takeover.

Nick Spoliar, analyst at WH Ireland, said that the price is less than an informal bid made by Cathexis for the firm last June of 拢1.74 a share, or 拢86m, which ISG鈥檚 board rejected at the time for undervaluing the company.

Spoliar said: 鈥淭he fact that they are now recommending acceptance [after rejecting an earlier higher bid] is a measure of the damage done by the nameless issues lurking in the construction business which have repeatedly emerged to trouble them.鈥�

Spoliar added that ISG鈥檚 fit-out business 鈥渋s trading very well by all accounts, creating fundamental long-term value which Cathexis will no doubt mine or exploit further down the line鈥�.

Tony Williams, analyst at 黑洞社区 Value, predicted the firm would refocus on its 鈥渃ore business鈥� of fit-out before looking to add value for a potential sale in 18 months to five years鈥� time.

He said: 鈥淭hey鈥檒l be looking for an exit, either a trade sale or float. I reckon they got it cheap. People were so fed up they were able to hoover up stock. They should be able to put at least 拢1 of value on that per share. It鈥檒l be eminently sellable.鈥�

Williams also speculated that Cathexis may look to replace ISG鈥檚 board given its long-standing opposition to a takeover. He said: 鈥淲hat they鈥檒l likely do is go to the next level down of management.鈥�

ISG chief executive David Lawther (pictured) said: 鈥淐athexis clearly sees the strength and potential of ISG鈥檚 businesses. The board remains focused on the growth and future success of the company.

鈥淚t is business as usual for ISG and its employees, suppliers and customers.鈥�

Cathexis will take ISG private and delist it from the London stock exchange if it receives acceptances taking it over 75% support.