Xchanging receives takeover interest from Apollo and Capita

On September 29, the Board of Xchanging confirmed that it would be willing to recommend this 160 pence per Xchanging share offer and Capita was granted due diligence access.

Xchanging confirms it has received separate approaches from Capita Plc and Apollo Global Management, LLC that may or may not lead to an offer being made for the company. It added that its current offer was final and that this deal would enable it to save £35m by cutting overlapping costs.

At least one large listed outsourcing group is also understood to be in the running to buy Xchanging, while a sector analyst said that other logical contenders would include Advent globaly, the buyout firm, and Wipro Technologies, the Indian company.

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

Apollo, meanwhile, has proposed a 170p-per-share bid. It claimed that Capita made three proposals of 140 pence per share in cash, followed by 145 pence and 155 pence to acquire the company on 11 August, 2015, 25 August and 17 September, respectively.

Apollo and Capita have until November 2 to make a firm offer for Xchanging as per UK takeover rules.

Xchanging’s share price has fallen by almost half in the past year and closed last week at 110.75p, well below the 300p peak it reached before the financial crisis. The Board believes Xchanging has a leading insurance software business and an enviable position in the insurance market, a stable capital markets business, and a growing Applications Services business.