Apollo and Capita compete to take over Xchanging

Xchanging is likely to make a statement tomorrow, confirming the approach.

Capita has been granted due diligence access to Capita following a series of improved offers, the latest being at 160p a share in cash. Lazards is advising Xchanging, along with Investec and Liberum. Other banks are also said to be involved in the situation.

Capita said its 160p-per-share takeover plan would help it to expand into business services in the City, tapping into Xchanging’s client base in insurance and asset management.

The move comes after Xchanging’s chief executive said he would leave, after shares in the company slumped following a profit warning in July.

Capita, which runs services including the Ministry of Defence pension scheme, said separately that Xchanging’s board had confirmed it would be willing to recommend Capita’s final offer.

It said it was still in positive talks about a number of multi-year and material Xuber contracts and would update the market when appropriate. “The outlook for the full year is a trading performance in line with last year and a return to growth in the full year 2016”.

Xchanging, formerly the sponsor of the Oxford and Cambridge boat race, has been struggling to shift its focus from traditional back-office tasks, such as payroll, into more high-tech services, such as data analytics.