Burrows' Alto offers £7.3m for Cobra

Alto Intermediary has offered 20 pence a share in cash, or £7.3m, for broking group Cobra.

Alto was set up by Cobra chief executive Stephen Burrows, and was the sole suitor in the running to buy Cobra.

The offer is a 17% discount to Cobra’s closing price of 24p on 2 April, the last business day before the offer period began.

As an alternative to the cash offer, Alto is also offering shareholders one ‘B’ share in Alto for each Cobra share they own. However, this alternative is not recommended, Alto said.

Cobra has recommended the cash offer to its shareholders and notified the London Stock Exchange that it intends to cancel its listing on the Alternative Investment Market.

The cancellation of the shares is subject to approval by shareholders at a general meeting unless Alto gains acceptance from 75% of Cobra shareholders, at which point the offer will be declared unconditional.

Cobra said Alto wanted to delist the company to save costs.

As part of the AIM cancellation, it has been proposed that Cobra’s chairman and other non-executive directors resign, and that Cobra terminates its relationships with its nominated adviser and stockbroker.

The firm offer from Alto follows five extensions to the offer deadline. Broker consolidator Towergate was also in the running to buy Cobra, but pulled out in mid-May.

Burrows said in a statement: “Following the receipt of disappointing initial indicative offers for the Cobra Group earlier this year, I am delighted to be able to offer Cobra shareholders the chance to exit with a cash payment or to remain a shareholder as Alto moves forward. I am looking forward to delivering the long term strategy of the business.”

Cobra chairman Peter Robinson added: “Following an approach from a potential purchaser earlier this year, Cobra and its advisers have had discussions with several potential purchasers, leading to the receipt of indicative offers, the highest of which was Alto’s at 20 pence per Cobra share. 

“Two interested parties (Towergate Insurance Group and Alto) conducted pre-acquisition enquiries with due diligence and, following Towergate’s withdrawal, Alto made its offer. We, the independent directors, are therefore pleased to recommend cobra Shareholders to accept the offer in respect of the cash consideration.”