Shares in AIM listed packaging systems specialist SDI Group (LON:SDIG) jumped over 12% after the company recommended a cash offer, which values the company at £2.8m, from FSU Investments – a newly incorporated investment company owned by SDI chief executive Gordon Smith and certain other members of the board.
The independent directors have recommended the offer. In reference to the current trading environment, and the independent director’s recommendation, independent non-executive chairman Mark McMenemy highlighted the challenges for the business.
"The retail sector which is the cornerstone of SDI's client base has been through a difficult trading period during the past two years ... The recent UK budget increasing VAT and announced public sector deficit cuts are likely to elongate the period of uncertainty and low expenditure for retailers .... While there will ultimately be an upturn at some point ... there is no certainty when this will happen or whether SDI will be in a position to take advantage of such upturn,” McMenemy said.
“(It is) against this background, and the recently announced losses, that the independent directors have decided to recommend that it is in the best interest of shareholders to achieve a current cash return on their investment.”
FSU Investments’ offer consists of a 2.6p per share offer, worth £2.8m, plus a further contingent consideration of up to 0.8p per share.
In favour of the proposed buy-out, FSU Investments has received irrevocable undertakings and non-binding letters of intent (LOI) to vote in favour of the resolution, totaling 69.6m shares which represents 63.7% of the issued shares - including irrevocable undertakings and non-binding LOIs to accept the offer, for 42.37%.