Carlyle backs out of TIG bid

(By Anthony Miller – Wednesday, 1st April 2009 9:00am). Private equity giant, Carlyle Group, has withdrawn from negotiations with insurance software and services firm, The Innovation Group (TIG) after a mooted 15p a share offer (see Private equity bid values TIG at 200%+ premium). TIG’s shares plummeted 32% to 4.9p as I write. TIG management gave no reasons for Carlyle throwing in the towel, but said they were “unrelated to the business or performance of Innovation”. Carlyle had not commenced due diligence.

I suppose this shouldn’t have come as a great surprise, given that management had knocked back a 15p-20p tentative offer late last year (see Innovation Group should "Take the Money"). However, we suspect that the bid came with the proviso that TIG setlled its outstanding law suit; a 'string-free' 15p offer we think would probably have garnered a much better hearing. The trouble is, history often shows that spurning offers that are getting lower and lower sometimes has a very unhappy ending. Our good friend George O’Connor at Panmure postulates that “while there are positives in the company, it will take time (possibly a regime change) for them to be reflected in the share price.” Now, we couldn’t possibly comment on TIG’s stock prospects, but understand why he thinks that some fairly dramatic ‘restructuring’ may be required to restore confidence in the company. Hopefully sooner rather than later, because this is looking more and more like ‘death by a thousand bid rumours’.