Price comparison site rejects takeover

Jul 24 2008 by Alex Turner, Liverpool Daily Post

MONEYSUPERMARKET.COM’S share price rose 50% yesterday after it announced it had rejected a takeover approach.

The Deeside-based price comparison website’s share price had climbed steadily during the day before it confirmed that Simon Nixon, its founder and chief executive, had received an unsolicited approach from an undisclosed source.

In a mid-afternoon statement, the company said: “The board notes the recent movement in its share price and confirms that an initial approach regarding a possible offer for the company was today made to Simon Nixon, the company's chief executive, in his capacity as 54% shareholder.

“The approach did not contain indicative terms for any offer and has been rejected by Mr Nixon.” Shares in the FTSE-250 company climbed to 102.5p following the disclosure of the rejected offer, which valued the business at more than £500m. The shares later fell back to close at 84.25p, a 22% increase on the previous day’s close. The price remains just under half its 170p price when it floated last July.

Moneysupermarket.com has grown quickly in recent years but the price comparison website sector has become increasingly competitive, with a flurry of new entrants last year, including gocompare.com and tescocompare.com, launched by retailer Tesco.

Earlier this month, Moneysupermarket issued a trading statement warning that revenues would be down by £7m following the withdrawal of Barclays-owned Firstplus from the home loans sector, while underlying earnings would fall by up to £5m.

Analyst David McCann, at Numis Securities, said: “It has obviously had its problems, but it is a market leader in the UK and probably globally, in terms of the competences, technology, knowledge and experience. That does make it attractive to a lot of people.”

He added the bidder could yet come back with a more detailed offer to woo Nixon and other shareholders.

“It doesn't look like the company rejected it on price because a price wasn't offered. This doesn't mean they won't sell out,” he said. “The only sticking point is they floated a year ago at 170p. There is that psychological barrier.”

alex.turner