‘Extreme shareholder destruction’: Fitzwalter dials up assault on Auction Technology Group
Auction Technology Group management have been accused of overseeing a period of “extreme shareholder destruction” by its largest shareholder, in the latest salvo of a feud that has seen the auction platform provider rebuff 11 takeover approaches from the firm.
In a blistering update to markets on Monday, Fitzwalter Capital said Auction Technology Group’s (ATG) board was guilty of “disastrous oversight”, after its share price fell 51 per cent, 46 per cent, 64 per cent and 82 per cent over one, two, three and four-year horizons.
“The board… is totally and completely detached and divorced from their track record, as evidenced by the share price performance,” said Andrew Gray, a partner at Fitzwalter, who also accused ATG’s top brass of failing to engage with any of its 11 offers.
Earlier this month it emerged Gray’s boutique private equity firm has been locked in a secretive, attritional battle to take control of the struggling Auction Technology Group, making nearly a dozen takeover bids in since September.
The latest of Fitzwalter’s bids – tabled on 23 December – valued ATG at £436m, a 33 per cent premium on the group’s share price before its interest was made public.
London-listed ATG disclosed the barrage of offers last week, after the private equity shop threatened to make its manoeuvring public. In an update to investors, the tech group said it had rejected a slew of “opportunistic and highly conditional” bids that “fundamentally undervalue the company”.
The board condemned the fund’s unsolicited approaches, which leadership said were a cynical attempt to take advantage of the disconnect between its public market valuation and its inherent “fair value”.
Fitzwalter bids follow difficult Chairish acquisition
ATG has struggled to arrest successive years of slowing sales and ballooning debt. In its latest set of full-year results, its net debt climbed 52 per cent and earnings per share fell two per cent, with chief executive John-Paul Savant conceding it was “not delivering financially”.
Its debt was compounded by the $85m (£63.1m) acquisition of the loss-making online marketplace Chairish in August, which was funded by drawing on a pre-existing revolving credit facility. Its share price fell over 21 per cent on the day the deal was announced.
Fitzwalter said that, including integration and adviser fees, the acquisition cost over 20 per cent of ATG’s market capitalisation.
The firm wrote: “If, even after shareholders have suffered the severity of shareholder value destruction caused by the share price reaction to the Chairish acquisition, and voted with their feet as to its merits, the board remain proud of (to the point of trumpeting) their “conviction” – shareholders can ill afford any more of the board’s conviction.”