Teddy Sagi makes £1.25 billion takeover bid for Kape Technologies

Kape Technologies is the latest UK-listed tech company to consider delisting after receiving a £1.25 billion takeover from majority owner and Israeli billionaire Teddy Sagi.

Sagi, who also owns Camden Market in London and founded the betting software group Playtech, blamed the “thin trading” of Kape shares for the decision to privatize the company.

Kape’s shareholders, which is listed on London’s Junior Aim market, will be offered 285p per share, valuing the company at £1.25bn. Shares in Kape rose 12 percent to 290 pence on Monday morning.

If the remaining shareholders agree, the digital security software company will join a growing list of UK-listed tech companies to be acquired over the past two years, including industrial software group Aveva and cybersecurity group Avast.

Bankers and founders complain that investors on the London Stock Exchange are undervaluing promising technology companies, instead focusing on larger companies with stable dividends.

“After weighing the pros and cons of an IPO given the current macroeconomic uncertainties and thin stock market trading and emerging growth avenues, we strongly believe the next chapter in the journey from Kape to private should be one,” Sagi said in a statement .

Online retailer Seraphine blamed the “significant costs” of being a UK listed company last month when it unveiled a similar take-private offer from its major shareholder Mayfair Capital. Seraphine was one of 33 tech IPOs in 2021, with all but one now trading at a significant discount to their initial offering prices.

The takeover activity will counterbalance the excitement that the FTSE 100 hit a record high last week, with the rally driven in part by investor demand for international companies in the mining, energy, banking, industrials and utilities sectors rather than smaller tech stocks.

The UK government has sought to ease start-ups’ access to the public market through a series of stock exchange reforms, although a global slump in investor interest in IPOs last year stalled efforts by companies to take advantage of the new rules.

Kape dismissed a Sagi proposal of 265p per share as “insufficient value” for shareholders ahead of Christmas. But the board gave Sagi’s investment vehicle Unikmind access to limited information about the company and its prospects in order to encourage a higher bid.

Unikmind then made a revised proposal of 285 pence per share in January. It requires approximately 75 percent of the total voting rights in Kape to agree to the delisting of its shares from Aim. Kape’s board of directors has told shareholders not to take any action for the time being.