Auction Technology Group LON:ATG has firmly rebuffed a tentative takeover approach from FitzWalter Capital, arguing that the mooted proposal significantly undervalues the business and its long-term prospects, as the London-listed auction software provider seeks to steady investor nerves ahead of a trading update later this week.
In a statement issued on Monday, the board of Auction Technology Group (ATG) acknowledged an announcement by FitzWalter on 16 January in which the private equity firm said it was considering a possible cash offer of 400p per share.
The indicative proposal values ATG at a level the board considers materially below its intrinsic worth, given the company’s growth trajectory and strategic positioning in digital auction marketplaces.
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Crucially, the approach remains highly preliminary. ATG said it has not received a customary letter from FitzWalter setting out the detailed terms and conditions of any potential offer. Macquarie Capital, acting as FitzWalter’s financial adviser, confirmed that no such documentation would be forthcoming, leaving ATG’s directors to assess the proposal based on limited information and to make their own assumptions regarding structure, conditions and financing.
ATG is being “fundamentally undervalued”
Following a meeting on 18 January with its advisers, the board unanimously concluded that the indicative offer “fundamentally undervalued” the company. Shareholders have been advised to take no action at this stage, underscoring both the uncertainty surrounding FitzWalter’s intentions and the board’s confidence in ATG’s standalone strategy.
ATG, which provides cloud-based platforms enabling auctioneers to manage and stream live and online auctions, has benefited from the structural shift towards digital channels across industrial, commercial and consumer auction markets.
The company has repeatedly argued that its scalable technology, recurring revenues and international footprint position it for sustained growth, even amid a more cautious macroeconomic backdrop.
Scott Forbes, chair of ATG, said the board would continue to act in the best interests of all stakeholders and remained confident in the company’s independent prospects. While signalling openness to dialogue, he made clear that any engagement would depend on the emergence of a “comprehensive proposal that reflects fair value”.
“The board, mindful of its fiduciary duties, stands ready to constructively engage with FitzWalter, or any other party,” Forbes said. “However, we firmly believe that FitzWalter’s latest proposal fundamentally undervalues ATG and its future prospects.”
No certainty of an improved proposal
The company also noted that there could be no certainty that any firm or improved proposal would ultimately emerge, either from FitzWalter or another bidder. That caveat reflects the often tactical nature of early-stage takeover disclosures, particularly in a market where private equity firms have been opportunistic amid depressed valuations in UK-listed technology stocks.
Under the UK Takeover Code, FitzWalter now faces a deadline. In accordance with Rule 2.6(a), it must by 5pm on 2 February either announce a firm intention to make an offer or walk away, in which case it would be bound by the so-called “put up or shut up” provisions that restrict renewed approaches for a defined period. The deadline can be extended with the consent of the Takeover Panel.
ATG is due to provide a further update on its performance at its annual general meeting trading statement on 22 January, which may sharpen the market’s view on whether the company’s board can sustain its argument that patience, rather than a premature sale, will deliver greater value for shareholders.
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