M&G to oppose private equity bid for UK exhibition group Hyve
Big shareholders will vote against £481mn offer from US firm saying it undervalues company
M&G Investments will vote against a private equity takeover of UK-listed Hyve, along with at least two other large shareholders who warn the bid significantly undervalues the international exhibition company.
US firm Providence Equity Partners struck a deal last month to pay 108p per Hyve share, valuing the London-listed events business at £481mn. The board of Hyve said “the offer represents value for shareholders”. Its largest investor, Strategic Value Partners, has said it will vote in favour of the deal.
However, top shareholders including M&G, Redwheel, and Blackmoor Investment Partners are planning to vote against the offer in the coming weeks. For the deal to go ahead, Providence needs 75 per cent of shareholder capital voting in favour.
“The latest offer for Hyve materially undervalues the company and we plan to vote against the takeover,” Rupert Krefting, head of corporate finance and stewardship at M&G Investments, told the Financial Times.
“We remain supportive of the management team and their strategy to capitalise on the significant investments made in recent years.”
Shares in Hyve were trading above £6 before the pandemic, but investors argue earnings have yet to fully recover. Taking it off the market now would mean longstanding shareholders lose out on the opportunity to revert to pre-Covid levels, they argue.
Krefting said Hyve’s share price is also still recovering from the impact of divesting assets linked to Russia and its high cost of debt connected to acquisitions which have performed well for the company — a dynamic which will alter as debt is paid down.
Hyve was among a number of businesses that was hit hard by lockdown. The war against Ukraine also sped up its planned exit from Russia, which accounted for half its revenue in 2021.
“We think the company has a positive future under public ownership, to the benefit of our clients,” said Krefting.
Redwheel fund manager David Stewart, the second-largest shareholder in Hyve with more than 10 per cent, also plans to vote against the deal.
“If you’ve got a level of confidence in the ability of this company to deliver on its targets and strategies, you would not want to sell it at the minimum acceptable price at this point in time,” Stewart said. Hyve is targeting medium-term growth of at least £250mn in revenue and an operating margin of 30 per cent.
Although investors credit the management team for repositioning the company, its future growth prospects have yet to be reflected in the share price.
Douglas Smith, managing partner at top 20 shareholder Blackmoor Investment Partners, which will also vote against the deal, said: “The board suggests the offer gives a total entity value of £481mn, but our current analysis sees a lower net debt which suggests closer to £440mn.
“This is a high quality business that is just recovering: it has significant barriers to entry from the network effect at the individual conference level; has pricing power in these inflationary times; got rid of the unattractive Russia exposure; and, holds important positions in attractive conference segments that would slot neatly into a number of competitors portfolios.”
Providence and Hyve declined to comment.