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Cambian jumps after around £405mln takeover proposal from social care services rival CareTech

The specialist education and behavioural health services provider said the preliminary proposal amounted to 220p per share for the company in cash or shares, a near 50% premium to its current share price

Takeover bid
Cambian said CareTech has also proposed an alternative full-cash offer of 200p per share

Cambian Group PLC (LON:CMBN) shares rose by a third in value on Tuesday after it revealed it has received around a £405mln takeover proposal from social care services rival CareTech Holdings PLC (LON:CTH).

The FTSE SmallCap specialist education and behavioural health services provider said the preliminary proposal amounted to 220p per share for the company in cash or shares, a near 50% premium to Cambian's closing share price on Monday of 148.2p. In late morning trading, Cambian shares were up 33.7% to 198.2p.

READ: Cambian Group trading in line with expectations

The firm said CareTech has also proposed an alternative full-cash offer of 200p per share.

However, Cambian added, the bid proposal is “at a preliminary stage and there can be no certainty any offer will be made, nor as to the terms of any offer.”

In a separate response statement, AIM-listed CareTech confirmed that it is in discussions with Cambian’s board regarding a possible offer which it said would be satisfied by a combination of CareTech shares and a cash consideration funded through new debt facilities.

Caretech shares were down 2.4% at 366p.

Liberum sees strategic rationale

In a note to clients, analysts at Liberum Capital said: “We see the strategic rationale for such a deal in that it would enhance Caretech's Young People's business and help to consolidate a highly fragmented market while financially there are likely to be significant central cost synergies from a combination.”

They added: “From a Cambian shareholder perspective, the new combined entity would have a stronger strategic position, likely a deeper management team and significant scope for synergies. Hence we see the attractiveness of a cash and share offer.”

 -- Adds share prices, broker comment --

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LSE:CMBN
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