Business disposals and tax adviser K3 Capital (LON: K3C) is recommending a 350p a share cash bid from a vehicle controlled by affiliates of Sun European Partners. This values K3 Capital at £272m.
The independent directors believe that trading could get tougher and that is why they recommended the bid. Some directors and management will take Bidco rollover notes as well as cash. These notes would eventually be exchanged for shares in the holding company of the business.
M&A adviser K3 Capital joined AIM in 2017 at 95p a share. Revenues and profit have increased significantly since then. This is through a combination of organic growth and acquisitions that diversified the business into other areas, such as tax.
Last year trading was better than expected for K3 Capital as revenues recovered. In the year to May 2022, revenues improved from £47.2m to £70.7m, with 24% organic growth. The total dividend was 12.1p a share. Net cash was £12m at the end of May 2022.
In the six months to November 2022, revenues are estimated to improve from £31.2m to £42m. Full year revenues are expected to be £79.5m, while underlying pre-tax profit is forecast to increase to £23m, which is much more than expected earlier in the year.
