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UK’s Blue Prism becomes latest target of U.S. private equity. And one activist investor is not impressed

  • Blue Prism shares surged on Wednesday after it confirmed that it had entered discussions with TPG Capital and Vista Equity Partners.
  • Shareholder Coast Capital believes Blue Prism is currently undervalued and it would be a mistake to agree to a takeover at the share price. 

Employees walk past FTSE AIM share price information displayed on an illuminated rotating cube at the atrium of the London Stock Exchange Group offices in London, U.K.Simon Dawson | Bloomberg | Getty Images

Robotics firm Blue Prism has become the latest in a line of British companies to attract the attention of U.S. private equity firms, but one high-profile shareholder has urged it not to sell.

Blue Prism shares surged on Wednesday after it confirmed that it had entered discussions with TPG Capital and Vista Equity Partners. However it stressed, "there can be no certainty that any offer will be made, nor as to the terms of which any offer would be made."

It comes after supermarket chain Morrisons, infrastructure group John Laing and aerospace company Cobham were all subject to transatlantic private equity approaches in recent months.

Blue Prism, one of the largest tech firms on the London Stock Exchange AIM market, uses robotic process automation (RPA) software to hire out a digital workforce to perform back office tasks for businesses. 

However, in a letter sent to Blue Prism's management team on Tuesday, seen by CNBC, shareholder Coast Capital, a notable activist investor behind opposition to FirstGroup's sale of its U.S. businesses, expressed concern about the valuation of the company. 

Coast Capital believes Blue Prism is currently undervalued and it would be a mistake to agree to a takeover at the share price. 

"As you are well aware, the Enterprise Value of Blue Prism PLC is currently valued at approximately three times forward revenues – an 80% to 90% discount to the company's peers including UiPath, Appian, WorkFusion, Automation Anywhere, etc.," the letter from Coast Capital said. 

"Were a buyer to pay a premium of 100%, the share price would still be materially lower than its intrinsic value, and well below where the shares were trading as recently as January 2021." 

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