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InterQuest – possible management buyout offer, a piss take

By Tom Winnifrith & Steve Moore | Wednesday 17 May 2017

Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

With shares in InterQuest (ITQ) yesterday having increased on the day from comfortably below 40p to well above, at 3:51pm (noting the “recent share price movement” - nothing suspicious to concern AIM regulation then!) a newly created company (Chisbridge Ltd) formed by Gary Ashworth, Chris Eldridge and David Bygrave (respectively InterQuest Chairman, CEO and CFO and 33.3%, 0% and 0.1% shareholders) ‘confirmed’ “that it is evaluating making an offer for InterQuest at 42 pence per share in cash with a full loan note alternative”. They're taking the piss, surely.

Less than a year ago the shares reached 97.5p and were over 80p before a late June profit warning. However, that saw us reassured by Ashworth – and to consider that the shares were cheap at 52p. Gary, pal, you simply cannot have it both ways and we are shocked by your behaviour.

March saw 2016 results announced and us note Chris Eldridge emphasising “we have addressed the areas of the group that have underperformed during the year and developed our service offering both in the UK and in the US following the acquisition of RDW” and broker to the company, Panmure Gordon, forecasting pre-tax profit recovering towards £4 million this year, generating earnings per share of 7.5p.

Indeed, Panmure had a 100p target price – and this all suggests 42p is a piss take. Fortunately, the InterQuest independent directors, Paul Frew and David Higgins, being advised by Panmure, seem to concur – there a 4:20pm response that they “have unanimously concluded that they would be unable to recommend the proposed offer to InterQuest shareholders on the basis that it would materially undervalue the company and its prospects”.

Shares in InterQuest responded to close at 46.5p, and will thus likely fall back somewhat from here on a successful offer now not emerging. However, we consider there longer-term value comfortably in excess of this and these developments suggest the company ‘in play’. Our stance, for now, is hold.

This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tips from Tom & Steve and a new shorting piece from Lucian this week click HERE

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