A cash takeover offer for specialist insurer Abbey Protection has been recommended by the board despite being at a discount to the recent share price.
The offer has been made by US underwriting group Markel Corporation at 115p per share, valuing the company at £116.5m, although the shares
have been trading above this level for most of the last four months.
On the upside, Abbey's shareholders on its register of members on September 13th will be entitled to receive the interim dividend of 2.4p per share announced on September 4th and which is to be paid on October 10th.
AIM-listed Abbey's directors own 33.3% of the company, with other members of the senior team taking management's total stake up to 56.6%.
The board said it intended to unanimously recommend that the company's shareholders vote in favour of the deal.
The company quoted in a statement that Markel "has confirmed that it will not increase the acquisition price and that this is its full and final offer".
Since August last year, the board had employed advisors at PriceWaterhouseCoopers to find potential bidders as part of a succession plan for the business, with Markel one of those approached.
Abbey's board put the sale process on hold in early January 2013, but six months later Markel made a further approach, which led the board to reconsider its strategic options and conclude that "the best option for all stakeholders remained a sale of the company".
To try and justify the offer price, the company pointed out that while it represented a discount of approximately 4% on Tuesday's price, it was at a premium to the average share price of the company in the six years since Abbey floated on AIM, in which time pre-tax profits have grown relatively steadily from £7.3m to £10.3m.
The company also stressed that the offer price denoted a premium of "approximately 0.4%" to the closing price of 114.5p on May 20th, the day before Abbey announced a 5p per share special dividend.
Shares in Abbey Protection dropped 3.5% to 114.9p at 12:00 on Wednesday.