Ten Entertainment Group (LON: TEG) is the biggest riser on the London market after it agreed a 412.5p/share cash bid from Neon Buyer, which is owned by funds advised by Trive Capital Partners.
The bid is one-third higher than the previous day’s closing price. It values the ten-pin bowling sites operator at £287m. The takeover should complete in the first quarter of 2023. Net debt of around £196m is forecast for the end of 2023.
Trading is in line with expectations. The board says that the current economic and political uncertainty was a factor in recommending the bid. It also believes that the market was not reflecting the value of the business, which was trading on a lower rating than its peers.
The bidder plans to retain the management team and believes that it can help to accelerate growth through providing additional capital.
Consensus forecasts suggest a 2023 pre-tax profit of £28.6m, rising to £31.3m next year. The bid values Ten Entertainment Group at 13 times 2023 estimated earnings. The share price has never reached the bid level, with the previous high being 334.5p at the beginning of 2020.