UK-based TI Fluid Systems (GB:TIFS) has turned down another takeover offer from its Canadian competitor ABC Technologies. The company stated that it rejected the second offer of 176p per share, as it undervalues its prospects. Before this, TI Fluid rejected ABC’s offer of 165p per share on August 22. TI Fluid shares gained over 14% as of writing.
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ABC Technologies, majority owned by asset management company Apollo Global, manufactures automotive systems and components. Similarly, TI Fluid develops automotive components and delivery systems and operates in 27 countries worldwide.
TI Fluid Rejects Takeover Bids from ABC Technologies
After a thorough review with its advisers, TI Fluid Systems’ board unanimously determined that the proposal greatly undervalued the company and its future potential. Moreover, it strongly advises shareholders to refrain from taking any action at this time. Interestingly, the second proposal offers a 20.7% premium over TI Fluid’s closing share price of 145.8 pence on September 13.
On the other hand, ABC remains interested in a potential deal and is currently evaluating its options. According to U.K. takeover panel rules, ABC Technologies has time until October 12 to either make a formal offer or withdraw from the deal.
Is TI Fluid Systems a Good Buy?
Yesterday, analyst Vanessa Jeffriess from Jefferies reiterated a Buy rating on the stock, predicting an upside of 11%. Jeffriess views the latest cash offer of 176p per share as undervaluing the company, given its strategic progress and the industry’s shift towards hybrid vehicles.
Furthermore, Jeffriess believes that TI Fluid Systems is on track to achieve EBITA (earnings before interest, tax, and amortization) margins of over 10% in the medium term, potentially leading to a significant increase in the company’s valuation.
According to TipRanks, TIFS stock has a Moderate Buy rating, backed by one Buy and two Hold recommendations. The TI Fluid share price target is 168.33p, which implies a change of 0.92% from the current trading level.
