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(Sharecast News) - Tavistock Investments announced the proposed sale of two of its subsidiary businesses, Tavistock Partners Limited (TPL) and Tavistock Estate Planning Services Limited (TEPS), to the Saltus Partnership Holdings on Tuesday, for up to £37.75m.
The AIM-traded firm said the disposal, which would be a significant shift for the company, would see it receive an initial payment of £10.97m on completion, with the potential for a further £15.75m in performance-related deferred payments.
Additionally, £11.03m would be paid immediately following completion to settle an intragroup debt between TPL and another Tavistock subsidiary, TPUK.
The sale price reflected a 211% premium on Tavistock's market capitalisation as of the most recent market close.
Tavistock said the transaction required shareholder approval under the AIM rules, as it constitutes a fundamental change of business, although it would remain classified as an operating company.
It was also subject to regulatory approval from the Financial Conduct Authority (FCA).
Tavistock said it planned to use the net proceeds for working capital, potential future acquisitions, and possibly share buybacks, but it added there were no plans for a direct return of surplus cash to shareholders.
The company said it had already secured irrevocable undertakings from shareholders representing 30.04% of its issued share capital to vote in favour of the sale and a proposed share buyback authority.
Tavistock's board said it was seeking shareholder approval for the buyback authority, which would allow the company to repurchase its shares in the market over the next five years if deemed appropriate.
"The disposal enables us to realise a substantial profit on our investment in the businesses involved, providing us with significant working and development capital," said chief executive officer Brian Raven.
"This will enable the continued reshaping of the group to optimise the balance between regulatory risk and commercial reward."
At 1021 BST, shares in Tavistock Investments were up 39.91% at 3.01p.
Reporting by Josh White for Sharecast.com.
