Best of the Best ends formal sale process as strong trading continues

Online competition operator Best of the Best updated the market on the “continuing strength” of trading through its third quarter on Wednesday, also reporting that it had concluded its review of options under a formal sale process, which it launched in June.

The AIM-traded firm said trading in the third quarter ended 31 January had continued in line with the positive outlook it described in its interim results in mid-January, with the board reiterating the guidance that it remained on track to outperform its previous expectations.

It said that was being driven by the traction of its pure online model and increased confidence in marketing investment.

Strong trading and ongoing efficient cash conversion were being reflected in its increased cash balances, which the directors said remained in excess of £10m following the payment of the special dividend totalling £3.75m on 5 February.

The board said it was thus “highly confident” in the group's prospects for the future, and had concluded, following “extensive talks” with a range of parties from a number of sector verticals and private equity, that it was in shareholders' best interests to focus on the continuing growth of the business under its existing strategy.

It said the pure online strategy, with a focus on cash generation, enabled a policy of consistent shareholder returns.

The company entered into the review of options to explore early-stage discussions with a number of interested parties in an orderly fashion.

It said the ‘formal sale process’ mechanism was adopted in order to facilitate the discussions with certain regulatory dispensations under the Takeover Code, but was not intended to indicate that a sale was the most likely or preferred outcome, but only an option.

The board said it was determined that the review would not distract from the group's operations or extend longer than necessary, but the pace of the talks was unavoidably impacted by the restrictions relating to Covid-19.

With the conclusion of the review process, the company confirmed it was no longer in an ‘offer period’ as defined by the Takeover Code.

“I am pleased to report that the strong trading momentum reported at the time of our interim results has continued and that our strategy is proving out as well as it has,” said chief executive officer William Hindmarch.

“The board is confident in the Group's position and outlook for strong, sustained returns.

“The strategic review was initiated to originate and facilitate exploratory talks with potential partners more openly than would otherwise be advisable for a public company.”

Hindmarch said the extent of interest in the group was “very pleasing”, from a range of sectors, with each offering an “interesting viewpoint” on the group and its operations.

“Talks with a select few advanced to detailed stages but, after careful reflection and in view of the strength of the business' performance, the board concluded that it would be in the group's and its shareholders' best interests to focus on the continuing growth of the business under its existing strategy.

“The board is grateful for the time invested by parties in exploring these partnerships, combinations and transactions.”

At 1142 GMT, shares in Best of the Best were up 10.2% at 2,700p.