MARKET REPORT: US private equity swoops on another UK tech firm

Shares in the British software firm Sopheon soared yesterday as it looked set to be bought for £115million by a company which is backed by US private equity.

The AIM-listed firm jumped 87.8 per cent, or 430p, to 920p after it agreed to a possible cash offer worth 1000p a share, which is a 104 per cent premium on Monday’s closing price of 490p.

The bid was tabled by Chicago-based Wellspring, which is backed and controlled by private equity group Resurgens.

It is yet to make a formal offer but is expected to do so.

Sopheon said the proposal ‘presents an attractive valuation’ and ‘a compelling liquidity opportunity not currently afforded by the public markets’.

Sopheon jumped 87.8% after it agreed to a possible cash offer worth 1000p a share, which is a 104% premium on Monday’s closing price of 490p

Two shareholders who own nearly 40 per cent of the group have backed the offer.

Sopheon helps companies take their products and services from ideas to commercial delivery.

Its software has been used by the likes of consumer goods giant The Hershey Company.

If an offer is made, it will reignite fears over the pace at which British companies are being gobbled up by private equity firms.

In September, the buyout giant Permira agreed to buy pharmaceuticals services group Ergomed for £703.1million.

And two weeks ago Apax Partners snapped up the tech consultancy Kin and Carta for £203million.

But shares in another buyout target were well below the offer price amid doubts over whether the deal will go through.

Stock Watch – Kromek

Kromek soared 11.1 per cent, or 0.5p, to 5p as it cashed in on rising demand amid geopolitical insecurity.

The Durham technology group, which makes products that can identify ‘dirty bombs’, has received three orders worth more than £820,000.

Most of the revenue will be recognised this year.

Last week, Kromek won a four-year contract worth £4.85million from the US Government to help research and develop ways of detecting bioterrorism attacks.

Investors will vote on the proposed £191million takeover of life sciences group Instem by the French private equity firm Archimed tomorrow.

Instem was flat 765p, a far cry from Archimed’s 833p per share offer. It has said it needs the takeover to survive.

The FTSE 100 dipped 0.1 per cent, or 5.67 points, to 7321.72 while the FTSE 250 was up 0.4 per cent, or 65.46 points, to 17,083.05.

The blue-chip index fell 4 per cent last month on the back of gloomy results from the likes of NatWest and Standard Chartered, and conflict in the Middle East.

London’s mid-cap index has nursed even heavier losses, down 7 per cent in October.

CAB Payments rose 11.9 per cent, or 6.5p, to 61.2p to regain some of its losses a week after it plunged 72 per cent on the back of a sharp downgrade to the outlook.

Rolls-Royce cruised to the top of the FTSE 100 as the City remained optimistic over the jet engine maker’s fortunes.

Analysts at Barclays raised its rating on the stock to ‘overweight’ from ‘neutral’ and lifted the target price to 270p from 239p. 

While the stock has fallen by nearly a tenth in the past month, Barclays pointed out that this ‘presents a buying opportunity’.

Shares, which have more than doubled in value this year, rose 6.6 per cent, or 13.4p, to 215.4p.

Drinks bottler Coca-Cola maintained its forecast for annual sales to grow by at least 15pc this year but slid 0.5 per cent, or 10p, to 2132p.

GSK rose 0.3 per cent, or 5p, to 1457.4p and will pay nearly £820million for exclusive rights to develop and commercialise Johnson & Johnson’s hepatitis B therapy.

The world’s largest interdealer broker TP ICAP sank by 4.7 per cent, or 7.8p, to 157.1p after revenues in its core global broking business fell 6 per cent in the three months to the end of September.

And Elementis, the chemicals group which makes the ingredients for deodorants and skin creams, insisted it was on track to meet expectations for this year even though revenue fell 5 per cent in the three months to September 30. 

Shares climbed by 5.3 per cent, or 6p, to 118.4p.

This post first appeared on Dailymail.co.uk