Dignity has received a cash takeover proposal from a consortium that includes Sir Peter Wood, the insurance industry entrepreneur, and the listed funerals company’s former boss, that values it at about £263 million.
Shortly before the London stock market closed yesterday and after a jump in its share price, Dignity said it had received a series of unsolicited takeover proposals from a consortium made up of SPWOne, created by Wood, who founded Direct Line and Esure Group, and Castelnau Group, a London listed closed-ended investment company managed by Phoenix Asset Management Partners.
Phoenix is Dignity’s largest shareholder with a stake of about 29.4 per cent. Its chief investment officer is Gary Channon, who stepped down as boss of Dignity last year after a successful boardroom coup and overhaul of its strategy.
Dignity, advised by Rothschild, said it had rejected three approaches last year valuing Dignity at 475p, 500p and 510p a share, and had received a fourth proposal in November at 525p.
The latest proposal provides Dignity shareholders with the option of receiving “alternative consideration”: either unlisted equity in the consortium’s joint venture bid vehicle, or listed equity in Castelnau.
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Dignity said it had agreed to provide the consortium with access to “limited confirmatory due diligence” and that the bid is at a value that it would be “minded to recommend to Dignity shareholders” if it received a firm offer.
The consortium said the 525p approach was a 23.4 per cent premium to Dignity’s closing price on Tuesday and “represents a compelling opportunity for Dignity’s shareholders, offering a full and fair price at a time when the general investment outlook is very uncertain and Dignity faces substantial operational challenges, while also offering shareholders a way to benefit from the long-term value and opportunities of [the business]”.
Dignity is one of Britain’s biggest funeral companies and is based in Sutton Coldfield near Birmingham.
The shares have fallen from a peak of almost £29 in 2016. Under Kate Davidson, Dignity’s new chief executive, it is seeking to recover from concerns about a lack of price transparency, turmoil in the boardroom, the pandemic and the country’s current volatile death rate.
Shares in Dignity closed up 109½p, or 25.7 per cent, at 535p, suggesting that the market anticipates an improved approach.
