Carlyle Ends Talks with Innovation Group PLC

(Reuters) – British software firm Innovation Group Plc (TIG.L) said talks about a possible offer with private-equity firm Carlyle Group had been terminated and that it had ceased to be in an offer period.

The news prompted two brokerages to downgrade the stock to “hold” from “buy”.

“Clearly this is disappointing news that will send the share price into reverse in the short term,” analyst Jonathan Imlah of Altium Securities said in a research note. He also lowered his price target to 8 pence from 15 pence.

Panmure Gordon analyst George O’Connor agreed that the news of the termination would be “unsettling”.

“But the emergence of other “bottom fishers” should be ruled in rather than out,” O’Connor said.

Innovation, which provides outsourcing services to the insurance industry, had received an expression of interest at 15 pence per share from Carlyle Group in March.

Neither parties offered any reason for the termination of the offer.

In a statement, Innovation said Carlyle’s withdrawal was not related to the business or performance of Innovation and no formal talks had taken place following the receipt of the indicative approach.

Innovation has previously received offers ranging from 15 pence to 20 pence per share, which it rejected saying they were “not at a level acceptable” to the majority of its shareholders.

Altium Securities’ Imlah said, “The recent stop/start history of approaches may well put other would be suitors off in the short term.” Shares of the company were down 31.1 percent at 4.96 pence at 1046 GMT on Wednesday on the London Stock Exchange. They touched a low of 4.50 pence earlier in the session. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Himani Sarkar)