Bid for Dignity would offer 23.4pc premium

Bidco is set to make a possible offer for Sutton Coldfield-headquartered Dignity at £5.25 per share.

Dignity's board of directors is minded to recommend shareholders to accept the price.

The business operates crematoria at Lichfield, Stourport, Telford and Shrewsbury.

Bidco is a newly formed indirect wholly-owned subsidiary of Valderrama, a joint venture between SPWOne and Castelnau Group, whose discretionary investment manager is Phoenix Asset Management Partners.

The proposal is a 23.4 per cent premium to Dignity’s closing price of £4.25.5 as of Tuesday, which was the last trading day before the release of this announcement, and a 32.4 per cent premium to the closing price of £3.96.5 on November 11, which was the last trading day before preliminary agreement was reached between the parties on price.

The Consortium had first approached Dignity on October 13 in relation to a cash offer of £4.75 per Dignity share.

The latest proposal is an increase of more than 10 per cent compared to the first proposal.

It also includes the option for Dignity shareholders to stay invested in Dignity through an unlisted share alternative in Valderrama or a listed share alternative in Castelnau.

The consortium believes that the proposal represents a compelling opportunity for Dignity’s shareholders, offering a full and fair price at a time when the general investment outlook is very uncertain and Dignity faces substantial operational challenges, whilst also offering Dignity’s shareholders a way to benefit from the long-term value and opportunities of Dignity.

The consortium believes that Dignity has growth prospects that can only be realised over a long-time horizon and that require significant additional near-term capital.

Sir Peter Wood, of SPWOne, said: “Dignity has long-term growth potential – the signs are clear to me. But the changes and significant development work and investment needed to enable this growth mean the best way forward for Dignity is as a private company."

Gary Channon, chief investment officer of PAMP and former chief executive of Dignity, added: “We strongly believe that the changes needed to unlock the potential of Dignity are better implemented as a private company. Shareholders who want to stay invested could do so through the private holding company Valderrama, or via the London-listed investment fund Castelnau. Shareholders who want immediate liquidity can take cash for their shares at a 23.4 per cent premium."

The proposal is subject to the satisfaction or waiver of pre-conditions relating to, amongst other things, completion of confirmatory due diligence and the recommendation of the Dignity board.

Bidco is required, by not later than 5pm on February 1 to either announce a firm intention to make an offer for Dignity or announce that it does not intend to make such an offer.