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Investors to lose out in Baker Tilly & RSM Tenon deal 19 August 2013

Investors in RSM Tenon are likely to be left short-changed should a merger or takeover by Baker Tilly materialise.

Accountancy and advisory firm RSM Tenon announced rival firm Baker Tilly made an unsolicited approach regarding a takeover offer on 25 July.

A statement from RSM Tenon to the London Stock Exchange on Friday (16 August) said investors would likely only receive “minimal value” in the event of the deal going through due to the company’s level of debt.

The statement said: ““It is now likely that, as a consequence of the company’s high debt level, if an offer is made by Baker Tilly, minimal value, if any, will be attributed to the issued share capital of the company”.

Baker Tilly has until 5pm on Thursday 22 August to announce a firm intention to make an offer for RSM Tenon or announce it does not intend to make an offer, unless the takeover panel agrees otherwise.

Due to RSM Tenon’s levels of debt, any offer would need the support of its sole lender, Lloyds Banking Group.

Former chief executive Andy Raynor and chairman Bob Morton both left the company at the start of 2012, as RSM Tenon took a 27% hit to its shares. In October 2012 the company cut 400 jobs, as it later posted losses of £10m for the six months to 31 December 2012.

In February RSM Tenon posted a decline in revenues of 9.3% to £107.8m from £118.9m in 2010, while net debt rose £3.2m to £76.5m.

RSM Tenon shares dropped 33% to 1.3p on Friday following the announcement.

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