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Baker Tilly chews over Tenon takeover

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26th Jul 2013
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Baker Tilly has confirmed that it is reviewing a takeover bid for troubled top 10 accounting firm RSM Tenon, signalling continued consolidation in the mid-tier market.

Following the BDO/PKF merger earlier this year, RSM Tenon confirmed in a regulatory statement to the market that Baker Tilly had put forward an unsolicited approach for the firm, which could lead to an offer being made for the entire issued share capital of Tenon.

Tenon has so far provided information to Baker Tilly to help facilitate their investment evaluation process.

Baker Tilly also confirmed in a response that it has been reviewing the takeover and now has until 22 August to announce a firm intention whether it will make an offer for the rival firm.

Given its level of debt, Tenon explained that any potential transaction would require the support of its sole lender Lloyds Banking Group.

In accordance with the City takeover and mergers regulations, it will be an “unwaivable pre-condition” of the offer being discussed that Lloyds’ support is obtained before an offer can be made.

The firm went on to admit that if an offer is made, it is likely to be at a level which is “significantly below the current market price of the ordinary shares of the company”.

Tenon was dealt a further blow this morning when shares in the firm plummeted by 34% following the unsolicited takeover announcement.

Tenon endured a difficult 2012, announcing at the start of the year it would be restating its accounts for the year ending 30 June 2011 after discovering “black holes” in its accounts.

Former chief executive Andy Raynor and chairman Bob Morton left the firm at the start of the year, with the company taking a 27% hit to its shares.

Last October it announced it had cut 400 jobs, but by May this year Tenon said an award of £5.5m would push its accounts into exceptional profit of £2.8m for 2013, however it warned it was still in talks with its lenders.

If the deal goes ahead revenues of the new combined firm are expected to be around the £400m mark - closing in on the gap with rival Grant Thornton which posted revenues of £417m last year.

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By Mark Lee
28th Jul 2013 11:26

This is a sad post-script to the Consolidators story

It could be a great move for Baker Tilly but it's sad to see the impending demise of the 3rd big consolidator.

Back in 2009 there was talk of another group planning to launch a new consolidated practice in 2010. I questionned the logic for this in an article on accountingweb which also sets out the history of the consolidators as then existed. The new one was never launched.

Mark

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By carnmores
29th Jul 2013 17:28

not so sad Mark?

tenon have hardly covered themselves with glory in their relatively short existence. it was a good idea woefully executed...

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By GuestXXX
17th Mar 2015 15:56

.

 

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By AndyC555
30th Jul 2013 10:24

Tenon

I worked for them once.

 

And I didn't enjoy it.

 

So there.

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By Ben Gander
30th Jul 2013 10:45

Tenon

I worked for Tenon in Basingstoke and have a lot of respect for the tax directors there; however, nationally I didn't feel they knew what they were doing.  The local offices had no interest in following the guidance from the top, wanting to do their own thing, the executive made it clear that the shareholders were the most important thing, it was all very disjointed ...  They wanted to provide an alternative to the Big Four, but didn't have the structure or the will of their members to do it.  I was an estate planning, trusts and inheritance tax consultant there, but couldn't get on because all of the local offices wanted to do the work themselves, rather than use an internal specialist, or the financial services guys hogged all the work.

Baker Tilly shouldn't touch it with a barge pole.  It should go back to being separate local offices.

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By nikfry
30th Jul 2013 12:42

Ben pretty much sums it up

Once Andy Raynor was taken out of the equation it was doomed I feel

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By Robert Lovell
30th Jul 2013 14:47

Baker Tilly to pay ‘solely in cash’

Further to the announcement that Baker Tilly is reviewing the opportunity of making an offer for RSM Tenon, the firm has confirmed that in the event an offer is made, it will be solely in cash.

However, in a statement to the market, it added: “As previously stated, there can be no certainty that an offer will be made for RSM Tenon nor as to the terms on which any offer may be made.”

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