Telit finally reaches agreement on cash offer from DBay Advisors

After months of wrangling, Telit Communications confirmed on Tuesday that it had agreed to a recommended cash offer from DBay Advisors.

The AIM-traded firm said that under the terms of the acquisition, each scheme shareholder would receive 220p in cash per share, valuing the entire share capital of Telit at £306.9m.

That represented a premium of 58.5% to the closing price of 138.8p on 2 November, which was the last business day before the previous offer period started, and 6% to the closing price of 207.5p on 17 March, which was the last business day before the current offer period began.

The acquisition was being organised under Trieste Acquisition Holding, which is ultimately owned by funds managed by DBay Advisors and was formed for the acquisition.

An alternative offer was also being provided, which would see Telit shareholders receiving one consideration loan note from Trieste, which would be immediately exchanged for a non-voting B share, giving shareholders continued economic exposure to Telit under private ownership.

The companies did caution that the shares would be unlimited and would not be admitted to trading on any stock exchange, however, and would therefore be illiquid.

“Telit has transformed in recent years and is now a business built on strong financial, operational and governance foundations,” said Telit’s independent non-executive chairman Simon Duffy.

“Whilst we believe that Telit is well positioned to capitalise on growth opportunities in its markets, the cash offer represents an opportunity for shareholders wanting to realise their investment in cash to do so at a material premium to the historical share price of Telit.”

On 1 December, Telit announced that commercial discussions were taking place with DBay Advisors, with DBay confirming it was considering a possible cash offer for Telit at 190p per share on 4 December.

DBay then confirmed it was not intending to make an offer for Telit on 15 December, bringing the initial offer period to a close.

In January, Telit said it had undertaken discussions with Swiss semiconductor company U-Blox, which it terminated on 7 January as the board decided it would not be possible to reach an agreement.

U-Blox ended its offer period on 18 January, announcing it had no intention to make an offer for Telit.

Isle of Man-registered DBay reentered the ring on 18 March, confirming it was once again in talks with Telit over a possible offer.

“We are pleased to have reached agreement with the Telit board, and that the acquisition has received a unanimous recommendation,” said DBay Advisors managing director and operating partner Julian Addison.

“The cash offer represents an opportunity for Telit shareholders to realise their investment in cash at a material premium to the historical share price of Telit, and as an alternative to the cash offer, we have offered Telit shareholders the ability to retain a shareholding in Telit going forward through the alternative offer.”

Addison said DBay believed Telit would benefit from a return to private ownership, without the barrier of its current listing.

“We look forward to working with Telit's management and employees to accelerate Telit's current strategy and unlock the long-term value in Telit.

“Under Bidco's ownership, Telit will benefit from the flexibility required to achieve its strategy, extensive access to follow-on capital, and the operational best practices developed by the DBay team over 20 years.”

At 1008 BST, shares in Telit Communications were up 11.39% at 225p.