Employees walk past FTSE AIM share price information displayed on a lighted rotating cube in the atrium of the London Stock Exchange Group’s offices in London, UK
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Robotics firm Blue Prism is the latest in a series of UK firms to attract the attention of U.S. private equity firms, but a high profile shareholder has urged it not to sell.
Blue Prism’s shares rose Wednesday after confirming they had started talks with TPG Capital and Vista Equity Partners. However, she stressed: “There can be no certainty that an offer will be made, nor on the terms on which an offer would be made.”
It comes after supermarket chain Morrisons, infrastructure giant John Laing, and aerospace company Cobham have been exposed to transatlantic private equity approaches in recent months.
Blue Prism, one of the largest tech companies in the London Stock Exchange’s AIM market, uses robotic process automation (RPA) software to hire digital workers to perform back office tasks for businesses.
In a letter to Blue Prism’s management team on Tuesday seen by CNBC, shareholder Coast Capital, a notable activist investor who is reluctant to sell its U.S. operations by FirstGroup, expressed concerns about the company’s valuation.
Coast Capital currently considers Blue Prism to be undervalued and it would be a mistake to approve an acquisition at its share price.
“As you know, Blue Prism PLC’s business value is currently valued at about three times its appointment revenue – a 80-90% discount over the company’s competitors including UiPath, Appian, WorkFusion, Automation Anywhere, etc.,” the letter from Coast Capital said.
“If a buyer were to pay a premium of 100%, the share price would still be considerably lower than its intrinsic value and well below the value that the share was still trading in January 2021.”
James Rasteh, CEO of Coast Capital, said Blue Prism was facing a number of problems – such as product gaps in its portfolio, its position on the London Junior Stock Exchange, and its geographic distance from many key customers – but which could be overcome . He said Coast worked with industry experts to develop an operational improvement plan to drive sales growth and increase Blue Prism’s stock value.
“In addition, we note that the Blue Prism PLC team (including management and board) has developed and maintained the world’s leading unattended automation software product with an extremely valuable customer base of more than 2,000 large corporations,” said Rasteh.
“Even in the worst of times today, the company has an enviable reputation as a best-in-class performer, keeping it at the forefront of its fast-growing and highly profitable industry. Now is not the time to throw in the towel!”
Blue Prism declined to comment. TPG Capital and Vista Equity Partners were not immediately available for comment when contacted by CNBC.
“Reverse Activism”
Where coastal capital is public urged management change at FirstGroup, Rasteh told CNBC in an email Thursday that the company’s engagement with Blue Prism was “the opposite of activism” and claimed it plans to work with management to implement the operational changes needed .
Coast Capital has a stake of almost 3% in Blue Prism. According to data from Refinitiv Eikon, Jupiter Fund Management, which declined to comment, is the largest shareholder with 7.49%.
The company’s stock rose up to 39% on Wednesday but remains in the red around 30% for the year.
“The CEO, Jason Kingdon, is clearly a visionary in the UK’s high-tech industry and does not have long enough time to influence the workforce changes and operational improvements that can and will transform Blue Prism,” said Rasteh.
Kingdon was an early investor in Blue Prism and became Chairman and CEO in April 2020.
