Hogg Robinson shares were trading at 116 at the time of writing while the FTSE 100 as a whole was down 25 points after heavy selling in Asian markets overnight. The business travel company reported that it had received a takeover offer from American Express, or rather GBT Holdings, which is the global business travel unit for American Express.
Hogg Robinson shares hover close to 120 pence
American Express said it would pay a maximum of 120 pence per share for Hogg Robinson. This would value the company at nearly £400 million. In addition, Visa is offering to buy Fraedom, which is Hogg Robinson’s payments and expense management unit. This is part of a sale and purchase agreement which has already been agreed between Hogg Robinson and Visa.
Hogg Robinson shares had previously been trading in the 70-80 range, so the offer from American Express puts a stark new valuation on the company that will please shareholders.
The acquisition is intended to occur under a court-sanctioned scheme of arrangement, as per the UK Companies Act. This means the actual price that each shareholder will receive will largely depend on whether the Fraedom deal goes through before or after the date of the Scheme Court Hearing.
If before, then the shareholders will receive 120 pence per share, if subsequent to the hearing, then 110 pence will be offered. This takes into consideration that fact that part of Hogg Robinson is already in play – i.e. Visa is trying to acquire part of the business as American Express swoops for the rest.
Fraedom has been a Visa business partner for nearly 10 years, and its technology underlies Visa’s IntelliLink Spend Management, a core platform for Visa’s commercial and small business clients. The transaction is expected to close before the end of March.
All in all it seems to us like a very good deal for Hogg Robinson investors. The price being paid is well above what you would have got for Hogg Robinson shares last month.