Alterian puts pressure on SDL to sweeten offer

Alterian, the UK provider of digital marketing technology that is the target of a takeover bid by SDL, has told investors it has identified more than £10m in savings, adding pressure on the translation software developer to sweeten its offer.

The company also said it would move its interim results forward ahead of SDL’s bid deadline on November 21, sending the share price up 3.75 per cent to 83p on the news.

On Monday SDL made the indicative cash offer for Alterian worth 80p per share, representing a 40.4 per cent premium to the closing share price last week. The offer was rejected immediately by Alterian’s board, which said it significantly undervalued the company. The price values Alterian’s equity at £50m.

Heath Davies, chief executive, maintained this view on Thursday, saying: “Companies get approached from time to time … For us it didn’t represent a credible offer.”

Alterian’s share price has lost more than two-thirds during the past six months following two profit warnings. During that time David Eldridge, the founder, stepped down as chief executive. Mr Davies was appointed in July when Alterian said it expected “good growth in the second half”.

Alterian said the £10.6m in savings identified would involve cutting staff numbers to 260 globally.

“The move [by Mr Davies] is very formulaic: you go in with a gun and start taking bodies, but who are they actually taking out? The concern is whether they are cutting too deeply,” said George O’Connor, analyst at Panmure Gordon, referring to employees with deeper knowledge of the business.

This month, four of Alterian’s directors resigned “by mutual consent”. These included the deputy chairman, Iain Johnston, and Michael Talbot, who was one of the founding members of the company.