We start this month with more takeovers, beginning with fashion-to-homewares retailer N Brown Group (BWNG:AIM), whose shares had been on a tear, more than doubling from their multi-year lows of 14p in May, well before this month’s bid came in.

On 17 October, the board announced it had agreed an all-cash offer of 40p per share from non-executive director Joshua Alliance, a member of the founding family behind the JD Williams to Jacamo owner.

The family said it had every confidence in the current executive team at N Brown, as well as its portfolio of well-established brands, but given the low liquidity in the shares, the lack of UK fund manager appetite for small-cap stocks and the costs of maintaining a listing, there was simply no benefit to the business remaining listed on AIM.

Luxury brand Mulberry (MUL:AIM) also found itself the subject of a bid this month, and after initially rejecting a 130p per share offer from the all-consuming Frasers (FRAS) said it was ‘considering’ the raised bid of 150p per share.

Shirebrook-based Frasers already has a 37% minority stake in the West Country leather goods maker, but Singapore-based majority shareholder Challice, the investment vehicle of Malaysian billionaire Ong Beng Seng, described it as ‘an inopportune time for Mulberry to be sold’ and said it ‘particularly regrets the distraction the possible offer is bringing to the company and its management team at this time’, which we take to be a no, at least not at the current price.

Showing how it should be done, perhaps, is automotive components maker TI Fluid Systems (TIFS), which said it was ‘considering its position’ after Canadian rival ABC Technologies raised its all-cash bid for the firm for a fourth time.

Having initially pitched its offer at 165p, ABC returned with offers of 176p, 188p, 195p and finally 200p per share, ultimately a 51% premium to the undisturbed share price the day before its first approach.

The TIFS’ board insists it is ‘confident in its strategy’, but should ABC make a firm offer at 200p it would pull its arm off, or ‘be minded to recommend it to shareholders’ as the press release rather more delicately put it.

RACE TO SHED ASSETS

As well as firms selling themselves, quite a few smaller companies have announced they are ‘rationalising’ (i.e. downsizing) their operations over the last few weeks, the most high-profile of which is probably banknote printer and identification specialist De La Rue (DLAR).

The firm, whose shares had trebled from their summer 2023 low of 30p but were still some way from their pre-Covid level of 300p, revealed last week (15 October) it was disposing of its Authentication business for an enterprise value of £300 million to Connecticut-based Crane NXT (CXT:NYSE), sending its shares above the 100p mark.

Since July 2023, De La Rue has been looking for buyers for both its Authentication and Currency businesses, and this month’s sale ‘realises significant capital and provides cash to the group for the benefit of all stakeholders by unlocking the intrinsic value’ of the division.

The cash will be used to repay debt and reduce the deficit in the legacy defined-benefit pension scheme, as well as giving the board breathing room as they try to work out what to do with the Currency division.

Meanwhile, shares in IT services and communications group Cloudcoco (CLCO:AIM) more than doubled from 0.14p to 0.40p on the news (16 October) it had reached a deal to sell its IT managed services business for £9.2 million.

Proceeds from the sale will be used to reduce long-term debt and ‘focus on expanding our value-added reseller operation, particularly in e-commerce, where we see significant opportunity’, said chief executive Simon Duckworth.

At the same time the firm is in advanced discussions to sell its Connect business to further bolster its financial position and ‘streamline’ its proposition.

BUY, BUY, BYE

Bath-based digital media firm Digitalbox (DBOX:AIM), which owns among other titles The Daily Mash, a firm favourite with this author, announced that having narrowly swung to a profit in the six months to June it would conduct a strategic review of its operations.

The return to profitability has been driven by acquiring and optimising digital assets, and the company is convinced there is scope to continue with its strategy, in particular in the entertainment space with highly-targeted brand launches, but after ‘clear representations’ from a key shareholder ─ which we take to be a UK fund manager specialising in micro-caps ─ the firm has decided to explore various options to maximise value, including putting itself up for sale.

Finally, micro-cap internet solutions firm Crossword Cybersecurity (CCS:AIM) had no choice but to hoist the For Sale sign after an internal review suggested it would need to raise up to £600,000 within the next six weeks if it were to remain a going concern.

The company has held talks with its biggest shareholders and a potential investor about raising further finance, but experience suggests a deal may be elusive as backers often turn out to have short arms and deep pockets when it comes to bail-outs.

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