Shawbrook to accept BC and Pollen Street's £868m take-private

Kenny Wastell
21 June 2017

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The board of directors of listed UK bank Shawbrook Bank have advised shareholders to accept a 340 pence per share takeover offer from BC Partners and existing investor Pollen Street Capital.

The development comes just two weeks after independent directors of the business advised shareholders to reject the deal, which values the business at £868m, arguing that it undervalues Shawbrook and its prospects.

Pollen Street and BC submitted their 340 pence per share final offer for the bank on 5 June after a previous bid of 330 pence per share was rejected by shareholders.

The board still maintains that this undervalues Shawbrook, though it has acknowledged that the private equity duo have received acceptances with relation to 75.6% of the issued shares in the company. This total would enable BC and Pollen Street to take the company private, thus meaning shareholders that reject the deal would likely find themselves with minority stakes in an unlisted company, which would "significantly reduce the liquidity of Shawbrook shares".

The proposed takeover was granted competition clearance from the European Commission on 2 June and the deadline for acceptance of the final offer has been extended to 10 July. Shares in the group were trading at 339 pence apiece at the time of publication.

The latest bid is the third made by the two private equity investors since the beginning of 2017. In January, the pair submitted a bid based on a 307 pence share price, which was also rejected by the board at the time.

Pollen Street – then known as Special Opportunities Fund – first invested in Shawbrook in 2011, which was known as Whiteaway Laidlaw Bank at the time.

Shawbrook listed in London in April 2015; its IPO gave it a market cap of £725m. The listing saw shares priced at 290 pence apiece, raising gross proceeds of £90m for the company. Following admission, Pollen Street remained Shawbrook's largest shareholder with a 59% stake.

Shawbrook is a lending and savings bank for SMEs. The business provides commercial mortgages, asset finance, business credit, secured lending and consumer lending. In its 2016 results, Shawbrook announced a 14% increase in profit before tax to £91.4m.