Artemis has pulled its previous support for a planned takeover of embattled vodka bar chain Revolution by pub group Stonegate, saying the bid no longer fully values the group.
The about turn by the company’s largest shareholder, which holds 15% of shares, opens the door to a rival bid by nightclub operator Deltic.
Revolution shares were 1.2% or 2.5p higher at the market open on monday, at 209.5p.
More than a third of the Artemis stake is held in its UK Smaller Companies fund, run by Citywire AA-rated Mark Niznik and co-manager William Tamworth, the second largest fund holders of the stock after A-rated Dan Nickols’ Old Mutual Smaller Companies fund
Artemis had earlier sent a non-binding letter of support for Stonegate’s £101 million cash offer, which had also been given the nod by Revolution’s board. Rival Deltic’s all-equity offer had earlier been rebuffed.
Stonegate’s offer of a 62% bid premium had not been universally welcomed however, with managers of the business said to have described it as ‘bargain basement’.
‘While our preference would be for a cash bid, we no longer believe that Stonegate’s offer reflects adequately the value of the company, either as a stand-alone business or as part of a group,’ Artemis said in a statement.
‘As such we do not consider it would be in the best interest of our investors to vote in favour of the Stonegate offer.’
The house said it had reconsidered its view following stronger than expected results, and the upgraded performance of a string of recent openings, which had previously weighed on performance.
It added that further due diligence on Deltic’s offer had reported better than anticipated benefits to the tie-up.
Revolution has had a rocky road since listing with an ongoing refurbishment programme and a difficult launch of new brands weighing on its share price, which is essentially flat on where it entered trading.
Shares in the group dropped 31% following a profit warning this spring.