Moneysupermarket.com rebuffs bid approach from private equity

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The Independent Online

The price comparison company Moneysupermarket.com, which has lost more than half its value since floating on the stock market last year, said yesterday it has rejected a preliminary bid approach.

The company, which is 54 per cent owned by its chief executive Simon Nixon, confirmed it had received an approach after its share price began soaring yesterday. Moneysupermarket.com shares rose by more than 22 per cent to 84.25p, though this is still well below the 170p at which it floated last August.

The approach is understood to have come from the private equity sector rather than from a company already active in the increasingly crowded price-comparison sector.

Moneysupermarket.com's competitors include uSwitch.com, which is owned by EW Scripps, and Admiral Insurance's Confused.com. It is also facing pressure from newer entrants, including Tesco, which is heavily promoting its Tescocompare.com service. Google is also rumoured to be studying the sector.

While Moneysupermarket.com refused to disclose the identity of the potential bidder, it is believed to be a private equity investor rather than a rival. A company spokesman said: "The unsolicited approach did not contain indicative terms for any offer and has been rejected by Mr Nixon."

The company would interest private equity investors looking for possible bargains because its shares have fallen sharply this year amid concerns it will be adversely affected by the woes of the wider financial services sector. Its valuation was further depressed this month after it was forced to issue a profits warning following the surprise announcement from Barclays Bank that it would close its secured loans business FirstPlus. Moneysupermarket.com warned lost referrals to FirstPlus would reduce its revenues by £7m, about 4 per cent of its forecast sales for the year.

David McCann, an analyst at Numis Securities, said it was possible the bidder might yet come back with more substantive proposals. "Moneysupermarket.com has obviously had its problems, but it is a market leader in the UK and probably globally, which makes it attractive to a lot of people," he said. "It doesn't look like the company rejected it on price because a price wasn't offered – that doesn't mean it won't sell out."

Analysts at Citi said they believed the company was undervalued. "Even allowing for a slowdown during the year, we believe the stock is cheap versus global internet stocks and the UK media sector, due to its structural growth, dominant market position and diversified revenue streams."

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