The Tribal contest shows an exit is won on structure, not just price

On 29 September Jenzabar, which holds 26.19% of Tribal Group, announced that it is considering a possible cash offer of 111p a share for the AIM-listed education software company. It urged shareholders to vote against the board-backed sale of Tribal’s businesses to Main Capital Partners at the general meeting on 2 October. Tribal’s board, chaired by Richard Last, replied the same day that the Main deal is “the only certain transaction currently available”.

The two numbers are not the same kind of number. Jenzabar’s announcement is a possible offer under Rule 2.4 of the City Code on Takeovers and Mergers, not a firm intention to make one under Rule 2.7. It wants confirmatory due diligence first, says funding would come from existing cash and debt facilities and/or third-party financing “which are to be finalised”, and must announce a firm intention to bid, or that it will not bid, by 5pm on 27 October unless the Takeover Panel extends it.

Main’s deal is signed but conditional, and it is not a takeover offer. A Main Capital vehicle, Thames Bidco, has agreed to buy all of Tribal’s operating subsidiaries for about £231.2m, up from about £189.3m when the sale was announced on 11 September. Tribal then plans to seek shareholder approval to cancel its AIM listing and enter a members’ voluntary liquidation (MVL), paying out in two tranches the board expects in the first half of 2027. The “approximately 105 pence” a share is not a price Main pays to shareholders. It is the board’s estimate of net proceeds per share: £231.2m divided by about 220.2 million shares on an effective fully diluted basis, a statement reported on by BDO and Investec as the Code requires. The board warns that what shareholders receive “may differ from, or be materially lower than” that estimate.

So shareholders are weighing an estimated 105p, paid through a liquidation next year, against a possible 111p that is not yet an offer. That is the lesson for leaders of UK technology businesses, listed or not: an exit is decided by structure and certainty – who is locked in, what vote is needed, how and when the cash arrives – as much as by headline price. At Tribal, most of those choices had been made before Jenzabar appeared.

The lock-up tightened as the price rose

On 11 September Tribal reported irrevocable undertakings or a non-binding letter of intent to back the sale covering about 44.2% of shares. The institutional undertakings had lapse prices: Gresham House Asset Management’s would fall away if a competing offer of at least 90p were made, and those of Harwood Capital and Schroder Investment Management at 95p. With the higher price, announced on 28 September, those three gave new undertakings that “will not lapse in the event of any offer being received by the Company at any value”. Liontrust and RWC also signed undertakings that do not lapse at any value. With the directors’ 4.15%, the total is 113,066,571 shares, about 52.7% of the issued capital.

The board says these commitments “are not capable of being withdrawn or varied in the event of a higher offer for Tribal”, and that the directors are contractually bound to hold the meeting on 2 October. Jenzabar has asked it to adjourn. The sale requires approval at a meeting held no later than 5 October, and the Liontrust and RWC undertakings, about 13.4% of the shares, cease to have effect if the meeting has not been held by then.

Jenzabar calls the vote “not a vote on price” but on whether shareholders “retain the right to consider a higher offer at all”. The board calls Main’s the only certain deal. Both describe the same mechanism: certainty bought by removing holders’ option to switch.

An asset sale moves the risk

Selling the subsidiaries needs shareholder approval under AIM Rule 15 and, because of an earlier approach from SilverTree, under Rule 21.1 of the Takeover Code, the 11 September announcement says. Tribal would then be a cash shell to be wound up. Jenzabar argues that its offer would pay shareholders directly, so they “would not bear liquidation, cost or timing risk”. Tribal puts deal, company and liquidation costs at about £8.4m, which it expects to fund from cash in the operating companies rather than from the £231.2m.

Certainty cuts both ways. Main’s sale also carries a National Security and Investment Act condition. Jenzabar says that, on advice, it does not consider its offer raises a substantive UK merger control issue. Tribal rejected SilverTree’s 95p proposal for reasons including unclear funding, a possible Competition and Markets Authority condition and “a lack of evidence that the proposal had the support of the Company’s largest shareholder”. That holder, by its own account, is Jenzabar, a shareholder since 2015 that appears in neither list of undertakings.

Build the sale before the rival arrives

None of this settles which bidder should win, and the vote has not happened. But founders and boards planning any sale can learn from the sequence:

• Map the register first. Tribal judged SilverTree partly on the largest holder’s support. A deal that leaves that holder outside invites the same question.
• Write lapse terms deliberately. A break price leaves room for a rival; “any value” removes it. Signatories should know which they are giving; boards should expect the tighter one to be challenged.
• Compare delivered value. A per-share figure from an asset sale is an estimate that depends on costs and timing; a possible offer is a price with conditions attached. Put both on the same basis before recommending either.
• Show the working. Tribal’s estimate carries a reporting accountant’s opinion that it was properly compiled, yet Jenzabar attacks the absence of a revised circular after a £41.9m price change.

Price gets a bidder into the room. Structure decides whether the door is still open when it arrives.