System1 rejects £43.1m takeover proposal from Brave Bison

Marketing research company System1 has rejected an improved £43.1 million takeover proposal from Brave Bison, despite acknowledging that a combination of the two marketing technology businesses has “strong underlying industrial logic”.

Brave Bison, a media, marketing and technology company listed on London’s AIM market, already owns a 28% stake in System1 and is its largest shareholder, confirmed it has been in discussions with the company’s board over a possible cash-and-share offer for the remaining shares it does not own.

Revised offer for System1

The revised proposal values System1, which is also listed on London’s AIM market, at approximately 327p per share, comprising 68p in cash and 2.7553 new Brave Bison shares, representing a 65% premium to System1’s undisturbed share price and valuing the business at £43.1 million.

However, Brave Bison,  revealed that System1 rejected its original proposal on valuation grounds, although the board has since acknowledged the strategic rationale for combining the two businesses. Discussions between the companies remain ongoing.

Brave Bison said the proposed merger would create “AIM’s challenger marketing data and technology company”, with combined pro-forma net revenues of £79 million and adjusted EBITDA of approximately £14 million, before any potential cost savings.

The company added that the enlarged business would be better positioned to compete in the rapidly evolving AI-driven marketing technology sector by combining scale, technology and investment capacity.

Brave Bison acquired its 28% strategic stake in System1 in March this year through a transaction that included a share exchange with System1 founder John Kearon, who subsequently became an 8% shareholder in Brave Bison.

According to Brave Bison, System1 has provided access to due diligence information and its senior management team during the discussions, enabling the company to submit an improved offer that includes a cash element in addition to shares.

The cash component of any formal offer would be funded through a credit facility currently in advanced stages of negotiation, with no equity fundraising required.

No formal offer has yet been made, and there is no certainty that a transaction will proceed.

Brave Bison’s shares were trading 2.2% lower at 88p per share on Monday, following the announcement, which was made via the London Stock Exchange’s Regulatory News Service (RNS).

System1’s shares were up almost 1% at £3.08, following the statement.