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Science Group PLC on Monday said it is buying consulting firm TP Group PLC for a vast premium compared to TP's closing share price on Friday.
TP Group shareholders will receive 2.25 pence per share, a significant premium to the closing price of 0.78p on Friday. The transaction values TP at around £17.5 million.
TP rose significantly to 2.12p from 0.78p on Monday morning in London, while Science shares were 4.7% higher at 398.00 pence each.
Around 12% of TP shareholders have given a letter of intent to accept the offer. Science Group itself already holds a 28% stake, meaning almost 40% support in total.
TP's board on Monday unanimously recommended the take-over by Science Group, a Cambridge, England-based science and technology consulting company.
Regarding the possibility of continued independence, TP explained: "To remain as an independent company, the capital structure of the group needs to be addressed. It is not certain that any refinancing can be completed on terms which would be acceptable to the Board or TP group shareholders."
In a business update on its TPG Maritime Division, TP commented on an economically unviable contract which it named "Contract A" with a "UK Customer": "The overspend on this large, fixed price contract only became apparent early in 2022, resulting in material provisions and prior year adjustments as previously reported. Continuing with this very onerous contract in its original form was not financially viable for TPGM, placing the business at serious risk of insolvency."
Following, TP has reached an agreement to restructure the contract as a qualifying sub-contract. The company said that while the terms remain sub-optimal, it would be in the best interest of all stakeholders to accept the compromise due to current supply obligations.
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