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(Sharecast News) - Auction Technology surged on Friday after its largest shareholder, FitzWalter Capital, said it was considering an increased possible cash offer for the online auction operator of 400p a share.
Fitzwalter has already made 11 buyout proposals to ATG, the most recent of which - at 360p a share - was rejected on the basis that it fundamentally undervalues the company.
But FitzWalter said on Friday that it is now considering increasing the proposal to 400p a share, which would value ATG at 491m. It would also represent a premium of about 48% to the undisturbed share price on 2 January. The last offer was a 33% premium to the undisturbed share price.
FitzWalter said the proposal should be considered against the fundamental performance of the business over recent years and ATG's track record.
It noted that the company's core marketplace revenue growth accounting for 67% of FY25 revenues, and an even higher proportion of EBITDA, has fallen below 1%. This low growth rate compares to US nominal GDP growth of 4.9% and is a product of gross merchandise value having cumulatively fallen 8%, 20%, and 21% over one, two and three years, respectively, it said.
It also pointed out that adjusted EBITDA has declined 4% year-on-year in FY25, representing the first decrease since the IPO in 2021, as a result of cost growth in excess of revenues.
FitzWalter urged ATG shareholders to encourage the board "to engage in constructive discussions" with it and work "towards a deliverable transaction, or risk further value destruction by the existing board".
Andrew Gray, partner at FitzWalter Capital, said: "We value and respect the opinions of other shareholders.
"Our proposal would give shareholders certainty to realise a cash offer at an attractive premium, compared to trusting a board that has consistently failed to deliver shareholder value. We urge all shareholders to compel the board to engage with FitzWalter in order to deliver a transaction."
Under UK takeover rules, FitzWalter has until 2 February to either announce a firm intention to make an offer or walk away.
At 1455 GMT, the shares were up 12% at 360p.