Capita gets green light to acquire Xchanging

BPO and software outfit snubs higher bid for private equity. Yes, you read right

The powers that be at LSE-listed BPO and software provider Xchanging have accepted a formal 160 pence per share bid from Capita, despite it being lower than one from a private equity player.

Last week, Xchanging confirmed it had received approaches from the Brit outsourcing giant and a 170 pence per share offer from Apollo Global, and had allowed the pair to look under its bonnet.

Xchanging said it approved the lower offer “in order to ensure a minimum certain outcome” for shareholders and “impose a clear regulatory timetable for Apollo potentially to announce a competing offer”.

The private equity investor has until the end of the day on 2 November to get in on the action.

In a statement to the City, Capita confirmed its proposed deal values Xchanging at £412m, which is 44 per cent on the closing share price of 111 pence on 2 October - the last business day prior to the start of the “offer period”.

Capita said the “final offer” will only be increased if Apollo Global decides to up the ante with a rival bid. In the absence such a move, Xchanging directors intend to rubber stamp the offer from Capita.

It hasn’t been a vintage year for Xchanging: slower than expected trade at an acquired firm, Agencyport, and contractual issues in the BPO unit led to a profit warning in July and confirmation of a new CEO joining.

The new man that was charged with leading Xchanging, former HP Services exec Craig Wilson, was expected to join the business in January. ®