Mobile VAS Company IMI Mobile‘s* bid to acquire a controlling interest in AIM listed WIN Plc has hit a bump, with ISIS Equity Partners, WIN’s largest shareholder, saying that the bid of GBP 1.41 per share, which values WIN PLC at GBP 14,850,455, “would substantially undervalue the Company”. At the time of filing this report, WIN PLC was trading at GBP 1.15.

According to the statement, ISIS owns 19.01 percent stake in WIN, higher than the 18.56 percent owned by AXA IM UK; a December 2009 statement had suggested that AXA was WIN’s largest shareholder, followed by ISIS, but that situation appears to have changed since.

The decision rests with the WIN Mobile board, but note that IMI Mobile has an irrevocable undertaking from AXA to accept an offer for WIN, should it be made, at GBP 1.41 per WIN ordinary share (or if someone bids 5% higher), which lapses on June 30th 2010. Apparently, IMI had approached ISIS them for a similar undertaking, which ISIS says it declined. ISIS has “encouraged” the WIN board not to accept the offer, but keep in mind that IMI Mobile has 2.37% stake already in WIN, and along with AXA’s irrevocable offer, would make it the largest shareholder if the deal goes through without ISIS on board. However, shares in WIN have been acquired recently: Arden Partners now has 1.4% shares in the company, having recently acquired a nominal number of shares at GBP 1.22 per share; Guy Thomas now owns 1.52%, Rathborne Brothers has 1.57%, and Close Asset Management Ltd has 3.71%.

ISIS believes the price should be higher, saying that that WIN will benefit from ‘economic recovery’, and increased penetration of smart phones, and the investment already made in its WINs Next Generation Messaging Platform could materially enhance the capacity of its business and allow it to address new markets.

IMI Mobile had raised $13 million from Sequoia Capital and First Mark Capital late last year, its third round of funding, and acquisitions in the EU and USA have been on the agenda.

WIN is a UK based mobile services company, partnering with mobile operators like Vodafone, O2, T-Mobile, Maxis, and running mobile marketing campaigns. It provides WAP portal, SMS and MMS alerts, Multi Media Console services with clients like BBC, Yell.com, ADP, Fujitsu, The Guardian, etc. It has 113 employees (at 2009 end) and 5 offices around the world. Details on its financial performance here.

The announcement:

WIN Plc: ISIS response to Potential Offer

We note the recent announcement from WIN Plc dated 30 April 2010 under Rule 2.4 of the City Code on Takeovers and Mergers (the “Code”) regarding a potential offer for the Company from IMImobile (“IMI”). We also note that IMI has procured an irrevocable undertaking from AXA IM UK in respect of its holding of 1,955,000 WIN ordinary shares (representing approximately 18.56 per cent. of WIN’s issued share capital) to accept an offer by IMI for WIN, should it be made, at 141p per WIN ordinary share.

ISIS EP LLP (“ISIS”) is the largest shareholder in the Company and manages, on a discretionary basis, 2,001,818 WIN ordinary shares on behalf of its clients the Baronsmead VCTs (representing approximately 19.01 per cent. of WIN’s issued share capital). In our opinion, the potential offer, at 141p per WIN ordinary share, would substantially undervalue the Company. Prior to the 30 April announcement ISIS was approached by representatives of IMI who sought an irrevocable undertaking from us to accept an offer by IMI for WIN, should it be made, at 141p per WIN ordinary share. We declined to provide this.

In our opinion, over time: the Company’s earnings have the potential to benefit from economic recovery; there are expanding opportunities within the mobile market as the penetration of smartphones and other mobile devices continue to increase, and; investment the Company has already made in its Next Generation Messaging Platform could materially enhance the capacity of its business and allow it to address new markets. For these reasons, we have encouraged the WIN Board not to recommend an offer at this level on the basis that it does not adequately reflect the potential value of the business.

[filing]

* – Disclosure: IMI Mobile is an advertiser with MediaNam

Related:
IMI Mobile In Talks To Acquire UKs WIN Plc At GBP 1.41 Per Share