Brave Bison’s System1 bid runs into its own largest shareholder

On 21 October Brave Bison Group published its Day 54 update on its increased final offer for System1 Group, a fellow AIM-listed company. As at 3pm on 20 October, 35.20% of System1’s shares counted toward the acceptance condition: valid acceptances of 7.35% plus the 27.85% stake Brave Bison already owns. The Day 53 update, published on 20 October, gave the same 35.20%. The condition needs more than 50%, and acceptances close at 1pm on 26 October.

For each System1 share the offer is 180p in cash, 2.394 new Brave Bison shares and one contingent value right (CVR) that may pay 20p. Brave Bison, which called it its “fifth and final offer” on 7 October, puts the value at 405p excluding the CVR. System1’s board puts it at 360.75p at 6 October prices, a 6.1% premium to the 340p close that day, and at 365.5p, or 4.4%, at 14 October prices.

The board, chaired by Rupert Howell with James Gregory as chief executive, unanimously recommends that shareholders reject the offer. Howell said the board “remains firmly of the view that Brave Bison’s Final Offer materially undervalues System1”. Its second response document of 15 October lists written support to reject from holders of 31.4%. The largest block, 16.46%, sits with Bainsville Commercial, which the document describes as owned and controlled by Lord Ashcroft, Brave Bison’s largest shareholder. BGF holds 6.68% and the directors 8.13%, most of it the 7.13% held by Crucible Clarity Fund, in which non-executive director Lewis Robinson has an interest and on whose controlling board he sits.

The contest shows how a bid paid largely in the bidder’s own shares gets decided. Its value moves with the bidder’s share price, so target holders are judging the bidder as much as the target. Here, according to System1, the holder with the largest stake in that paper has confirmed in writing his intention to reject, and the response document states: “Brave Bison’s largest shareholder is not supportive of this Final Offer.”

The price behind the headline value

Brave Bison’s 405p rests on a 94p reference price, its 20-day volume-weighted average at 10 July 2026. The System1 board says Brave Bison’s shares closed at 90.5p that day, at 75.5p on 6 October and at 77.5p on 14 October. Each penny off Brave Bison’s price takes 2.394p off the offer, so the 18.5p gap between 94p and 75.5p accounts for the whole 44p between the two sides’ numbers. At 6 October prices the share element was worth about 181p, half the package.

Brave Bison says the offer is worth 105% more than System1’s undisturbed price of 198p on 27 February 2026, and its executive chairman Oliver Green said the cash alone is worth 91% of that price. The board measures against the current price and says it “does not believe that the Final Offer provides a sufficient premium for the control of System1”. It also says Brave Bison bought its stake in March at an average of 242p, shortly before a positive System1 trading update, and calls the offer opportunistic.

A CVR with a cliff edge

The CVR pays 20p in cash if Brave Bison’s volume-weighted average price over the 60 trading days after its FY27 final results, expected in April 2028, is 94p or lower. At 94.1p it pays nothing. It is unsecured and unlisted, it lapses if Brave Bison is taken over or delisted before the test and Brave Bison’s financial adviser Cavendish has not confirmed that the bidder has the cash to pay it. The board calls it a “modest and highly conditional” benefit.

At 6 October prices the gap between Brave Bison’s 405p and the board’s 360.75p was about 44p per System1 share. The CVR covers 20p of that at most, and only if the shares average 94p or less over a 60-trading-day test that both sides place around July 2028. A holder who accepts is swapping part of the share-price risk for a capped payment almost two years away.

The register before 26 October

Day 54 shows how much of the 35.20% overlaps with support Brave Bison had already secured. Brave Bison owns 27.85% and holds irrevocable undertakings and letters of intent over a further 11.82%, together 5,033,990 shares, or 39.67%. Of the shares already accepted, 354,094 come from two holders who signed those commitments. Brave Bison cannot yet say whether the other 579,177 accepted shares come from committed holders, and says some of them have instructed acceptance but that it cannot verify the instructions were carried out.

If all of those shares turn out to be committed ones, Brave Bison’s secured support stops at 39.67%; if none are, it reaches about 44.2%. The written support to reject covers 3,982,055 shares, or 31.38%. That leaves 3,673,028 shares, 28.95% of the register, outside both camps. To pass 50%, Brave Bison needs 1,310,547 of them, about 36% of that pool, and up to 579,177 may already be in. The rejection side is not locked either: the response document describes the directors’ and other holders’ positions alike as written confirmations that they “have no current intention” to accept, and none of the support to reject is described as irrevocable.

Brave Bison’s 405p depends on a 94p reference price above every Brave Bison close the documents cite since 10 July, and the single largest block against it belongs to the bidder’s own largest shareholder. With 39.67% committed and 31.4% declared against, the offer needs more than a third of the remaining 28.95% by 1pm on 26 October.