Kensington has recommended a takeover offer by Investec, ending speculation about the identity of its likely buyer that had focussed upon Morgan Stanley.
- each Kensington shareholder will receive 0.7 Investec shares plus a special dividend of 26p (payable by Kensington) for each Kensington share
- values each Kensington share at 519.5p a share based on an Investec share price of 705p a share on 29 May 2007
- values Kensington at approximately £283m
Sub-prime lender Kensington recently said talks with one unnamed party had reached an advanced stage and, if an offer was made, the price would be less than 560.5p per share – and so it is.
To accompany the offer announcement on Wednesday, Kensington issued a trading statement, in which it said it is cautious about the short-term prospects for the Group and expects 2007 total revenue to be significantly below 2006.
The lender has faced a difficult time after it issued a profit warning last year which was shortly followed by the departure of John Maltby, chief executive, who was replaced by Alison Hutchinson.
Kensington has suffered from a competitive market and has indicated in future it could see lower-than-expected income from early redemption charge penalties, which are incurred when customers repay their mortgages early. Deutsche Bank, Merrill Lynch and Morgan Stanley are all thought to have looked at the group.
Citi is advising Investec. Rothschild is financial adviser to Kensington.