Cap10's 125p a share offer for Sureserve 'looks cheap', says Peel Hunt

Under the terms of the deal agreed, Cap10 will pay 125p in cash for each Sureserve share. This represents a premium of around 38.9% to the closing share price on Thursday.

Broker Peel Hunt said: "This looks cheap for a market leader with attractive, defensive positions and a strong management team.

"We note that whilst organic growth looks assured (PHe circa 8% over the horizon), Sureserve has only completed one M&A transaction.

"We suspect the opportunity to rapidly develop the ‘platform’ for decarbonisation and energy solutions has drawn the PE interest.

"Although we would not discount a competing offer, it seems remote given that we suspect others will have looked in the past (and may have some concerns regarding outlook for gas boiler maintenance and legacy)."

Peel Hunt rates the shares at ‘buy’ with a 120p price target.