A Connecticut-based investment firm is sweetening its bid to acquire Computer Task Group.
The Buffalo-based information technology company has received an increased takeover bid from Assurance Global Services, a Connecticut-based investment firm run by a Buffalo native.
The unsolicited takeover bid is valued at $7 a share – about a 33% premium over the value of CTG's stock before the latest offer was disclosed.
The company said it would "carefully review and evaluate the new proposal in the context of CTG's strategic plan," which it launched in December to put more focus on its more profitable offerings, mostly in its solutions business.
CTG's board "is committed to doing what is in the best interest of our company and all CTG stakeholders," said Filip J.L. Gyde, the Buffalo-based information technology company's president and CEO.
The latest offer, which AGS valued at $112 million, is the latest volley in what to this point has been largely a one-sided courtship of CTG. The offer is the fourth proposal that the Greenwich, Conn.-based company said it has made to acquire CTG since last May and is higher than the $5.50 to $6 per share that AGS originally offered.
CTG in August rejected a bid from AGS that was worth $6 a share, saying that it "significantly undervalues CTG, [and] does not reflect the meaningful transformational efforts underway."
James Lindstrom, AGS' managing member, said in a letter to CTG's board that the company has declined to engage in any "constructive discussions" over an acquisition.
"At this point, we have serious concerns that the board would prefer to maintain the status quo rather than act in the best interests of shareholders and pursue a value-maximizing transaction," he wrote.
"I am very familiar with the history of CTG and personally care deeply about the best interests of this Buffalo-based company," Lindstrom said.
But he said the company's efforts to transform the business since the death of former CEO James R. Boldt in 2013 have been largely ineffective, with its stock declining by more than 20% over the past five years, even as the company spent more than $65 million on share repurchases and acquisitions under four different CEOs.
He criticized the growth strategy CTG released in December as being incomplete and lacking measurable financial goals and timelines.
"Given the uncertain situation, we believe it is an appropriate time to have serious discussions regarding a potential transaction," Lindstrom wrote. "Without the constraints of being a public company, a qualified partner can be highly beneficial to the company and its leadership, offering significant strategic and operational investment and the resources to greatly improve the odds of success."
CTG officials, however, have questioned whether AGS has the ability to complete an acquisition of CTG's size – a deal that would be bigger any any acquisition AGS has done before. AGS, with Connecticut-based Wax Asset Management, controls a 6.6% stake in CTG, according to Securities and Exchange Commission filings.
"It continues to be business as usual for all of us at CTG," Gyde wrote. "Our company made tremendous progress on our transformation to become a more solutions-centric business."
CTG has said it expects revenues in 2019 to rise by about 9% to around $390 million, with earnings per share ranging between 23 cents and 29 cents per share, up from a loss of 20 cents in 2018.
Lindstrom, who has a master's degree from Dartmouth College's business school, is the former CEO of health care firm Providence Service Corp. and has served as chairman and CEO at IES Holdings. Lindstrom founded AGS in 2018.