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IT Service Provider Rejects Unsolicited $83 Million Takeover Bid

CTG, a Buffalo, New York-based IT service provider (ITSP), has rejected an unsolicited takeover bid from Assurance Global Services (AGS). CTG says the bid undervalued the company.

AGS offered $6 per share in an open letter sent to CTG shareholders on July 23. That’s a premium over CTG’s 52-week trading range of $3.85 to $5.99.

With 13.87 million shares outstanding, according to Yahoo Finance, the offer values CTG at roughly $83 million, ChannelE2E estimates. The company’s current market capitalization is $69 million, ChannelE2E calculates.

CTG Rejects AGS Takeover Bid: Letter to Bidder

CTG’s board responded to the ASG letter, noting that board members considered proposals from AGS on May 21 and July 10.

CTG’s response stated:

“CTG is implementing a robust strategic plan to create shareholder value, the future benefits of which would be transferred away from CTG shareholders in a sale to AGS. The Company has taken a number of meaningful steps to focus on higher-margin business, make prudent investments to drive growth, and enhance its management team, Board and governance practices to support this process. CTG is committed to the execution of this plan and is making compelling headway toward its goals, as evidenced by CTG’s most recent quarterly results.”

CTG said it has performed substantial financial analysis and determined that AGS’ proposal “significantly” undervalued CTG.

CTG: Acquiring Assets to Grow Revenues

CTG has been making moves to grow its portfolio. Most recently, the company acquired Tech-IT, a Luxembourg IT solutions provider and integrator, for $10.3 million. CTG President and CEO Bud Crumlish said at the time the deal was part of an effort to make focused investments on the highest-performing areas of the firm’s business.

CTG also acquired French consulting and digital services company Soft Company in 2018.

CTG’s clientele includes some Fortune 500 companies. Most of its clients operate in North America and western Europe. It currently employs more than 4,000 people worldwide.

For its quarter ended June 28, 2019:

  • CTG’s revenue was $100.4 million, compared to $92.7 million for the corresponding quarter in 2018.
  • Net income was $943,000, compared to $940,000 for the corresponding quarter in 2018.

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