Tenon deal scrapped but pre-pack goes ahead
Baker Tilly does not intend to make an offer for the entire issued share capital of RSM Tenon, but following the appointment of Deloitte as administrators this morning, a deal has been agreed for the sale of Tenon's trading entities.
Early this morning Baker Tilly said in a statement to the market that despite pulling out of the takeover deal, there was significant value in the RSM Tenon Group and that it continued to be interested in an alternative potential transaction involving an acquisition of part or all of the business.
The Financial Conduct Authority (FCA) temporarily suspended shares in Tenon from trading this morning “at the request of the company pending an announcement”.
That announcement turned out to be the appointment of joint administrators from Deloitte - including Matt Smith, Nick Edwards and Clare Boardman - who immediately sold Tenon’s trading subsidiaries to Baker Tilly, with a pre-pack deal expected to complete within the next two weeks.
The trading entities of Tenon have not entered insolvency proceedings and will continue to operate as usual.
Deloitte partner Matt Smith said: “Immediately following our appointment, a sale of RSM Tenon Group plc’s trading subsidiaries to Baker Tilly was agreed and is expected to complete within two weeks, following regulatory and internal approval at Baker Tilly, which we are advised is a formality.
“We believe the proposed sale to Baker Tilly represents the best outcome for the RSM Tenon group. The management of the group have stabilised the business, returning it to profitability over the past 18 months and making this transaction possible to secure its future,” Smith added.
Smith, Edwards and Boardman have also been appointed joint administrators of Premier Strategies Limited - a subsidiary entity which historically provided tax advice, but ceased selling new business in March 2012.
Deloitte said that under a proposed sale of the trading entities of the group to Baker Tilly, subject to certain approvals, no job losses are expected.
Last month Baker Tilly made an approach to Tenon and has since been in talks over a possible merger. The firm was given a deadline of today at 5pm to announce whether or not it intended to make a takeover offer.
Baker Tilly had said that any offer would be in cash, but Tenon warned shareholders that they would see very little return due to its high level of debt. Last week Tenon said shareholders would not accept a “de minimus” offer.
Tenon shares plummeted in the weeks that followed and earlier this month it said investors would likely receive “minimal value” if it merged with Baker Tilly due to the high level of debt it carries.
Back in February, Tenon said it was unable to reach a new agreement with its sole lenders Lloyds Banking Group to reset the terms of its lending facility.
Lloyds said this morning that, should the company, as expected, be in breach of its banking covenants, it would not be willing to grant a covenant waiver.
It added that in the absence of any other available facilities, Tenon does not expect to continue to be able to meet its liabilities as they fall due and as such the appointment of administrators is the most appropriate course of action.