U.S. payment giant Corpay's takeover bid for the UK's fintech firm on FTSE 250 has been turned down
Financial Services Firm Alpha Group International Shuns Corpay Takeover Bid
Alpha Group International, a London-based fintech and consultancy services provider, has turned down a takeover bid from US business payments giant, Corpay.
Last week, Alpha announced discussions about a potential cash offer from Corpay. However, the company's board, after careful deliberation with financial advisers, unanimously rejected the proposal. Under City takeover rules, Corpay now has until 5pm on 30th May to present a solid offer for Alpha or abandon the pursuit.
With Corpay's proposal on the table, Alpha's shares experienced a 5.7% surge, making it one of the FTSE 250's top risers, closing at £29.70 on Tuesday afternoon.
Interestingly, this rejection comes on the same day that Deliveroo agreed to a £2.9 billion takeover by US rival DoorDash. This could signal a shift in the market, with foreign companies potentially swooping in on UK-based firms. In 2021 alone, several UK groups, such as Hipgnosis Songs Fund, Darktrace, and Tyman, were bought by foreign predators.
While the exact reasons behind Alpha's rejection are not disclosed, analysts attribute the high level of acquisition activity to discounted valuations possessed by British businesses. According to Russ Mould, investment director at AJ Bell, "European shares remain cheap relative to the US market despite greater investor interest this year. That means markets like the UK are still ripe for M&A given widespread valuation opportunities. If a foreign or domestic company was in the mood to do deals, there remain plenty of UK-listed stocks ripe for the taking."
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Should the acquisition be finalized, DoorDash will gain a presence in nine countries where it does not currently operate, including the UK, Ireland, France, and Italy. This acquisition, like many before it, represents another loss for the London Stock Exchange, which is losing multiple prominent companies to foreign predators.
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Why Alpha Group International Rejected Corpay's Takeover Bid
Alpha Group International rejected Corpay's preliminary all-cash takeover bid because its board, after careful consideration with financial advisers, felt that the proposal was not in the best interests of its shareholders[2][3]. The company did not disclose the financial details of Corpay's bid, but it is clear that the terms did not align with Alpha's strategic goals or valuation expectations.
Implications for Alpha Group International
- Independence Preserved: By rejecting the bid, Alpha Group International maintains its independence, allowing it to continue executing its current business strategy without external interference[1][2].
- Share Price Impact: Initially, Alpha Group's shares saw a slight increase after the rejection, indicating that investors may have been optimistic about the company's future prospects without the takeover[5].
- Future Strategic Flexibility: The decision allows Alpha Group to explore other strategic options, such as partnerships or acquisitions, that might better align with its growth trajectory[1].
Implications for Corpay
- Deadline Under UK Takeover Rules: Corpay has until May 30 to either make a formal bid or announce that it does not intend to proceed, under the UK's 'put up or shut up' rules[2][3]. This deadline can be extended with the consent of the Takeover Panel.
- Potential Re-evaluation of Strategy: The rejection may prompt Corpay to re-evaluate its acquisition strategy, potentially looking for other targets that better fit its business expansion goals[1][3].
- Market Perception: The rejection might impact Corpay's market perception, especially if investors view the failure to secure Alpha Group as a missed opportunity for growth[1]. However, Corpay's statement noted that there is no certainty of an offer being made, which might mitigate some negative perceptions[3].
- Despite discussions, Alpha Group International's board, in consultation with financial advisers, declined Corpay's takeover bid, emphasizing their commitment to their shareholders' interests.
- The proposed deal's rejection could highlight a potential shift in the market, encouraging foreign companies to pursue UK-based businesses due to discounted valuations.
- In 2021, several UK groups, including Hipgnosis Songs Fund, Darktrace, and Tyman, experienced takeovers by foreign predators, underscoring this trend.
- If a solid offer from Corpay isn't presented by 5pm on 30th May, they will need to cease their pursuit of Alpha Group International.
- Analysts, like Russ Mould from AJ Bell, suggest that European shares, including those in the FTSE 250, remain under-priced compared to the US market, making them attractive for mergers and acquisitions.
