SCOTLAND looks set to lose another listed company after venerable livestock auctioneer John Swan & Sons received a takeover approach valuing the firm at £8.2 million.
The Aim-quoted firm, which traces its roots back almost 160 years, said its board planned to recommend that investors accept the 1,350p per share approach from unlisted rival H&H Group.
Shares in Edinburgh-based John Swan, one of Scotland’s smallest quoted companies, almost doubled in value on the back of the potential bid, ending the day up 625p, or 96 per cent, at 1,275p.
H&H, which is headquartered in Carlisle and has interests spanning land and property, classic car auctions and insurance broking, has until 15 January to make a formal bid or walk away.
John Swan stressed there was no certainty than an offer would be forthcoming, but said the cash offer price of 1,350p could include a “partial share alternative”.
If a deal does go through, it would see John Swan join a growing list of Scottish listed companies that have been acquired by rivals.
In August, US audio chip developer Cirrus Logic completed its £291m acquisition of Edinburgh-based Wolfson Microelectronics. Other recent takeovers include the £170m purchase of Melrose Resources by Ireland’s Petroceltic in 2012, a year that also saw east Kilbride-based Robert Wiseman agree to a £280m bid from German group Müller.
Although H&H is not a quoted company, it has 1,040,000 shares in issue, held by about 1,000 shareholders, with share auctions taking place each quarter. At the most recent auction last month, 5,500 shares were sold at an average price of 2,589p, suggesting a market valuation of almost £27m.
In the year to 30 June, the firm saw its pre-tax profits jump by 28 per cent to £1.3m, on turnover that was broadly flat at £14.4m. The company, headed by chief executive Brian Richardson, operates livestock marts across Cumbria, the Borders and Dumfries and Galloway.
John Swan was founded in 1856, operating out of a mart in the Berwickshire town of Earlston. During the late 1800s and early 1900s the firm continued to open and run mart operations in East Lothian, Fife, Perth and Edinburgh.
However, the Edinburgh site closed in 2001 after falling victim to the foot and mouth crisis and the company now trades out of Newtown St Boswells and Wooler, which it describes as “two of the finest stock producing areas in Europe”. In October, John Swan sold a 1.4-acre piece of land in front of the former Edinburgh mart to Marco’s Leisure, owner of the adjacent Corn Exchange leisure complex, for £550,000.
The firm also included a clawback agreement in the deal, which could see it receive 50 per cent of any increase in the value of the land if it is sold on by Marco’s within five years or if planning permission is granted for change of use.
Pre-tax losses at the company narrowed slightly to £369,137 in the 12 months to 30 April, down from £372,177 the previous year, with chairman Alastair Ritchie lamenting a bad debt incurred in the second half that “masked a significant improvement in our mart performance”.
SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING