Northgate confirms bid rumours

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Northgate Information Solutions, the IT services and software company, on Wednesday said it had received a number of takeover approaches after shares spiked on Tuesday following rumours of a 100p-a-share private equity bid.

Shares in Northgate were up 6.8 per cent of 6p to 94p by late morning.

People close to the company confirmed today that it had received a number of approaches from private equity groups.

Northgate said: “In response to the recent movement in its share price, the board confirms that, following a number of unsolicited approaches, it is in discussions that may or may not lead to a formal offer being made for the company.”

Bridgewell Securities said on Wednesday: “ Private equity is surely involved and we believe the HR business is the jewel in the crown with margins of 25 per cent. The public sector is ripe for consolidation and this business has a good market position in what is a long-term growth market. We would imagine a private equity bidder would seek to accelerate the ongoing consolidation in this market by using the sale proceeds form HR to buy another business.”

Bridgewell added that it thought a bid price of up to 115p was “justifiable and accordingly we retain our overweight stance.”

Movement in the share price provided one of the few bright spots in Tuesday’s weak London market. Northgate has two main businesses. Its human resources division is the UK’s leading provider of payroll software, while its public services arm works with all of the UK’s police forces and 90 per cent of its local authorities.

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