System1 has unequivocally rejected a possible cash-and-share offer from Brave Bison, which values the market research firm at £43.1m.
System1 said the offer materially undervalues the business and carries no meaningful benefits for shareholders.
Brave Bison, which built a 28% stake in System1 in March and is its largest shareholder, announced its intentions on Monday after press speculation.
The marketing and technology group is proposing 68p in cash plus 2.7553 new Brave Bison shares for each System1 share, valued at around 327p based on Brave Bison’s 20-day average share price, representing a 65% premium to System1’s price of 198p before the strategic stake was announced in February.
System1 has taken a different approach to framing the premium around Brave Bison’s closing price of 90.5p on Friday, highlighting that the proposal is worth 317p per share, just a 4% premium to System1’s share price.
This is a level that System1’s board believes undervalues the company.
The combination would create what Brave Bison calls AIM’s challenger marketing data and technology company, with pro-forma net revenues of £79m and adjusted EBITDA of £14m.
Brave Bison said the deal would be funded by a credit facility in advanced negotiation, with no equity raise required.
The board had already rejected Brave Bison’s initial all-share proposal, made on 8 June, at an implied 297p with no premium.
The rejection follows System1’s full-year results last week, which confirmed record second-half revenue and new-business performance, alongside an increased final dividend.
We will watch with interest to see if Brave Bison returns with an improved bid.
Brave Bison is building momentum with its marketing and advertising education services, which it recently said are set for further growth in the second half of this year. A combination makes sense from an operations perspective. But the most recent offer doesn’t make sense for System1 shareholders.