BGF responds to Francisco Partners’ takeover offer for Blancco Technology Group

BGF, one of the largest dedicated investors to smaller companies in the UK, responds to Francisco Partners’ takeover offer for Blancco Technology Group (“Blancco“).

BGF, as a holder of approximately 3.7% of Blancco’s share capital, has considered the takeover offer announced on 2 August 2023. BGF’s view is that the offer price of 223p per share does not reflect sufficient value for Blancco.

We note the price of the bid represents a discount to Blancco’s peak price in 2021 (292p, on 16 March 2021), despite being a significantly more profitable business at both EBITDA and EPS level for both FY22 and forecast for FY23 (Source: Investec. 3 July 2023), having outperformed expectations significantly since June 2021 (Source: Investec, 9 June 2021). We note, however, that the Board is unanimously recommending acceptance of the offer.

We highlight Forager’s open letter to shareholders, published on 4 August 2023, and agree with many aspects of their analysis.

The announcement of the takeover offer cites “access to additional capital” as part of the reason for the acquisition. BGF, which has a balance sheet of £3bn, is well-resourced to support smaller UK listed companies achieve their longer-term growth ambitions. We have not been approached by the Board or its advisers to explore raising additional capital.

BGF will consider any takeover approach on its own merit. We believe, however, that Francisco Partners’ bid undervalues Blancco’s shares today.