Home The Possible Takeover of Blue Prism – Is Now Not The Time To Throw In The Towel?

The Possible Takeover of Blue Prism – Is Now Not The Time To Throw In The Towel?

by sol-admin

Blue Prism, one of the largest tech firms on the London Stock Exchange AIM market, uses RPA software to hire out a digital workforce to perform back-office tasks for businesses. This Wednesday, the company’s shares surged as much as 39% (but remains still down by 31,4% for the year) after it confirmed that it had entered discussions with TPG Capital and Vista Equity Partners. However, it stressed, “there can be no certainty that any offer will be made.” Here are some details.

In a letter sent to Blue Prism’s management team on Tuesday, shareholder Coast Capital, a notable activist investor, expressed concern about the valuation of the company. Coast Capital believes Blue Prism is currently undervalued and it would be a mistake to agree to a takeover at the share price.

“As you are well aware, the Enterprise Value of Blue Prism PLC is currently valued at approximately three times forward revenues – an 80% to 90% discount to the company’s peers including UiPath, Appian, WorkFusion, Automation Anywhere, etc. Were a buyer to pay a premium of 100%, the share price would still be materially lower than its intrinsic value, and well below where the shares were trading as recently as January 2021 (pictured).”

The letter from Coast Capital

Coast Capital CEO James Rasteh added Blue Prism faced a number of issues — such as product gaps in its portfolio, its position on London’s junior stock exchange, and its geographical distance from many key clients — but that these could be overcome. He said Coast had been working with sector experts to devise an operational improvement plan to boost revenue growth and increase Blue Prism’s stock value.

“Furthermore, we note that the team at Blue Prism PLC (including management and board) has built and maintained the world’s premier unattended automation software product, with an extremely valuable client base of 2,000+ large-scale enterprises. Even at its current worst, the company enjoys an enviable reputation as a best-in-class performer, and as a result, remains a leader in its rapidly growing and very profitable industry. Now is not the time to throw in the towel!

James Rasteh, CEO, Coast Capital

To recap, Coast Capital holds a stake of just under 3% in Blue Prism. The largest shareholder is Jupiter Fund Management with a 7.49% stake, according to data from Refinitiv Eikon. Blue Prism got its new chairman and CEO Jason Kingdon just in April 2020.

“The CEO, Jason Kingdon, is clearly a visionary in the high tech industry in the U.K., and has not been given long enough to affect the HR changes and operational improvements which can and will transform Blue Prism.”

James Rasteh, CEO, Coast Capital

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