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LONDON - Iconik Capital KG, a significant shareholder in Anexo Group Plc (LON:ANX), has expressed serious concerns over a potential takeover bid by DBAY Advisors Limited and others, which it believes undervalues the legal services firm. In an open letter to Anexo’s independent directors, Iconik, which holds about 3% of the company’s shares, emphasized the directors’ duty to act in the best interests of all shareholders, especially minority ones.
The investment firm highlighted Anexo’s current trading at a substantial discount to its intrinsic value, with price/book (P/B), price/earnings (P/E), and enterprise value/EBIT (EV/EBIT) multiples all below industry averages. Iconik pointed out Anexo’s shift towards housing disrepair (HDR) claims, which is expected to improve cash flow due to shorter settlement times compared to credit hire claims. Anexo’s management has confirmed the growing contribution of HDR work to the group’s performance.
Moreover, Iconik underscored the potential for significant cash inflows from ongoing emissions litigation against car manufacturers, including Mercedes-Benz (OTC:MBGAF). These settlements, if valued similarly to the Volkswagen (ETR:VOWG_p) case, could improve Anexo’s net cash position by over £20 million. The company’s recent financing deals have also led to interest cost savings, and a one-time success fee payment in 2023 is not expected to recur.
Iconik recalled a previous offer from DBAY at 150p per share in 2021 and argued that Anexo’s stronger position now would make a lower valuation unjustifiable. The firm also noted potential efficiency gains from implementing AI in case management at Anexo’s legal services division, Bond Turner, and the growing demand for both HDR and credit hire services.
The investment firm urged Anexo’s independent directors to engage an independent financial advisor to assess the company’s intrinsic value transparently and to reject any takeover that does not offer a fair premium reflecting Anexo’s true worth and future potential. Iconik also warned against any takeover structured through the issuance of loan notes, which it views as prejudicial to shareholders.
Iconik Capital has made it clear that it is prepared to take action to prevent an undervaluation of Anexo, including engaging with the public and contesting the fairness of any proposed scheme before a judge. The firm’s stance is based on the press release statement issued by Reach, part of the London Stock Exchange (LON:LSEG).
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