Tangent Communications, the UK marketing services group controlled by Michael Green, announced on Friday it was abandoning plans to take over St Ives, the printing company, after a frosty response from its target’s board.
Mr Green, the former chairman of Carlton who owns 45 per cent of Tangent, had been trying to win over St Ives’ shareholders after the printer’s board rejected a 272½p a share cash-and-shares offer last month, valuing the group at £282m.
Tangent, which on Friday reported a first-half pre-tax profit of £176,000, said it was withdrawing its offer and was “disappointed” by St Ives’ response to a proposal that “represented a compelling proposition for the shareholders of St Ives”.
St Ives had raised concerns over the £160m of debt planned for the new group if Tangent managed to acquire its larger rival.
Tangent, which has positioned itself as a pioneer in digital marketing, responded that the debt levels were sustainable because of St Ives’ £100m freehold property portfolio.
Tangent’s turnover in the six months to the end of August increased by 36 per cent to £4m, boosted by a larger number of customers and fast-growing demand for digital marketing services.
Pre-tax profit rose from £10,000 in the first half of 2005 to £176,000 in the same period this year, helped by a sharp increase in operating margins from 8 per cent to 13 per cent.