System1 rejects Brave Bison’s fourth takeover offer as valuation gap persists

System1 Group PLC (AIM: SYS1) has unanimously rejected Brave Bison Group PLC’s (AIM: BBSN) fourth takeover offer, arguing that the revised cash-and-share proposal still fails to provide an adequate control premium despite Brave Bison increasing the equity component. The latest offer comprises 135 pence in cash plus 2.394 new Brave Bison shares for each System1 share, which Brave Bison values at 360 pence using a pre-offer-period reference price and at approximately £47.5 million for System1’s fully diluted equity. System1 counters that Brave Bison’s September 15 closing price of 81 pence reduces the current implied value to about 328.9 pence per System1 share, below System1’s own 335 pence closing price. The takeover battle has become more complex because Brave Bison already owns 27.85% of System1 and says its stake plus letters of intent supporting the offer represent about 38.9% of System1’s issued share capital, while System1 says shareholders representing 22.89% have stated that they do not currently intend to accept. The central issue is no longer simply whether Brave Bison can increase its headline offer, but whether it can build enough shareholder support to cross the greater-than-50% acceptance threshold while its own share price determines much of the value System1 investors would receive.

Why has System1 rejected Brave Bison’s fourth offer despite the higher headline valuation?

Brave Bison increased its proposal after System1 published a five-month trading update in September. The fourth offer gives System1 shareholders 135 pence in cash and 2.394 Brave Bison shares, compared with the previous firm offer that carried an implied value of 327 pence when announced in July. Brave Bison says the revised terms represent 360 pence per System1 share when its equity consideration is valued using the 20-day volume-weighted average Brave Bison share price of 94 pence on July 10.

System1’s board argues that the more relevant comparison is the current market value of the Brave Bison shares being offered. With Brave Bison closing at 81 pence on September 15, System1 calculates that the fourth offer was worth approximately 328.9 pence per share, 1.8% below System1’s own 335 pence closing price. That difference explains why the two companies can describe the same proposal in markedly different valuation terms without either changing the underlying exchange ratio.

The dispute matters because most of the incremental value in the latest offer comes from Brave Bison shares rather than additional cash. The cash component remains fixed at 135 pence, meaning System1 investors who accept the principal offer would continue to hold meaningful exposure to Brave Bison’s future market value after completion.

How did Brave Bison’s approach progress from a strategic investment into a full takeover battle?

The contest began before the formal offer period. Brave Bison acquired a strategic interest in System1 in March through a share exchange involving System1 founder John Kearon, establishing a substantial position before pursuing outright control. Brave Bison subsequently made an initial proposal in June with an implied value of about 297 pence per System1 share.

A second proposal followed in July before Brave Bison announced a firm third offer on July 30, valued at approximately 327 pence per share at the time. The latest proposal is therefore the fourth approach and the third increase in consideration since negotiations began. Brave Bison argues that the sequence demonstrates its willingness to improve value for System1 shareholders despite repeated rejection from the target board.

System1 views the history differently, arguing that higher offers have still not produced a sufficient premium for control. The disagreement illustrates why share-based takeovers can remain contested even after the bidder increases the stated value, because falling bidder shares can offset an improved exchange ratio.

Why does Brave Bison’s existing 27.85% System1 stake give it a significant starting advantage?

Brave Bison already owns 3.53 million System1 shares, equivalent to approximately 27.85% of the issued share capital. It has also obtained letters of intent covering another 10.95% from shareholders including former System1 chief executive Stefan Barden and family interests, Heritage Capital Management, Alex Batchelor, Sarah Kearon and Heather Kearon.

Combined, Brave Bison says its owned shares and stated support represent around 38.9% of System1’s issued share capital. The offer remains conditional on Brave Bison securing more than 50% of voting rights, so the bidder does not yet have enough support to satisfy the acceptance condition. Nevertheless, it starts considerably closer to control than an acquirer beginning without an existing stake.

If Brave Bison reaches 75% or more of voting rights through ownership and acceptances, it intends to seek cancellation of System1’s AIM admission and re-register the business as a private company. Shareholders remaining outside the offer after such a delisting could therefore face significantly reduced liquidity.

How strong is System1’s shareholder resistance to the latest Brave Bison proposal?

System1 said on September 16 that shareholders representing approximately 22.89% of its issued ordinary share capital had provided written confirmations that they currently do not intend to accept the offer. That group includes directors and major shareholders, although statements of current intention are not necessarily equivalent to irrevocable undertakings and circumstances can change during an offer process.

One particularly unusual feature is the position of Lord Ashcroft. Interests controlled by Lord Ashcroft are major shareholders in both businesses, and he is Brave Bison’s largest shareholder. System1 said an Ashcroft-controlled entity holding roughly 8% of System1 had stated that it did not intend to accept the fourth offer.

This creates a shareholder dynamic in which a major investor in the bidder is simultaneously opposing the bidder’s attempt to acquire the target at the current terms. It does not determine the outcome, but it highlights the challenge Brave Bison faces in persuading enough System1 investors that accepting shares in the enlarged group represents better value than remaining independent.

Why has Brave Bison’s falling share price become central to the takeover economics?

Brave Bison shares closed at 81 pence on September 15, compared with 90.5 pence immediately before the formal offer period began in July. Because the principal offer includes 2.394 Brave Bison shares for every System1 share, changes in the bidder’s share price directly alter the market value of the consideration.

At the 81 pence closing price, the share element was worth roughly 194 pence per System1 share. Adding the 135 pence cash component produced the approximately 328.9 pence implied value cited by System1. Brave Bison instead uses a 94 pence 20-day volume-weighted average reference price from July to support the 360 pence headline valuation.

System1 shares closed at 335 pence on September 15, while their 52-week trading range has been approximately 170.5 pence to 429 pence. The market is therefore pricing System1 slightly above the offer’s value when calculated using the latest available Brave Bison closing price, reinforcing the board’s argument that the current proposal offers little immediate market premium.

What does System1’s £11.2 million cash balance mean for the cash portion of the offer?

System1 has also focused attention on the financing structure. The 135 pence cash element payable for shares Brave Bison does not already own would require approximately £12.4 million under System1’s calculation, excluding certain treasury shares and potential option exercises. System1 reported cash of £11.2 million at August 31.

The target board argues that the similarity between these figures weakens the economic appeal of the cash component because Brave Bison would acquire System1’s substantial cash balance if the takeover succeeds. Brave Bison has separately arranged debt facilities and its financial adviser has confirmed the availability of sufficient resources to satisfy the cash consideration.

Neither point changes the legal obligation for Brave Bison to fund the offer. The more relevant strategic issue is how much net value the bidder is contributing after accounting for the balance-sheet assets acquired with System1 itself.

How do System1’s latest trading expectations influence the valuation argument?

System1 expects revenue of approximately £38.8 million for the year ending March 2027 based on previously published consensus expectations, compared with £37.0 million in fiscal 2026. Adjusted profit before tax is expected to recover to around £4.2 million from £2.2 million, while adjusted EBITDA expectations stand at approximately £5.8 million compared with £3.7 million in fiscal 2026.

Brave Bison argues that the expected revenue growth remains modest when compared with System1’s fiscal 2025 performance and notes that forecast adjusted profit remains below earlier levels. It values the fourth offer at about 11.3 times consensus fiscal 2027 adjusted operating profit using its stated £47.5 million offer valuation.

System1 instead emphasises the expected earnings recovery and argues that recent investment is beginning to support renewed organic growth. The valuation debate therefore depends partly on whether shareholders treat fiscal 2026 as evidence of structural weakness or as a temporary earnings trough preceding stronger profitability.

Why is Brave Bison arguing that combining the two businesses could create a stronger marketing technology group?

Brave Bison operates across media, marketing, digital performance and technology services, while System1 specialises in advertising effectiveness measurement and predictive marketing data. System1’s platform serves more than 600 clients and uses emotional-response data to assess advertising creative before and after campaigns reach market.

Brave Bison sees the combination as a way to create a larger AIM-listed marketing data and technology business, bringing together marketing execution capabilities with proprietary creative-effectiveness tools. System1 shareholders accepting the main offer would collectively own approximately 16.6% of Brave Bison after full acceptance, giving them continuing exposure to the enlarged group.

System1’s board disputes whether the strategic benefits are strong enough to justify surrendering control at the proposed terms. It has also questioned how much of Brave Bison’s recent growth is organic rather than acquisition-driven, an issue that becomes more relevant because System1 shareholders would receive a substantial part of their consideration in Brave Bison equity.

What will determine whether Brave Bison can finally secure control of System1?

The immediate arithmetic is straightforward. Brave Bison needs to move from the roughly 38.9% represented by its existing stake and stated letters of intent to more than 50% of voting rights. That requires persuading additional investors despite the System1 board’s unanimous recommendation to reject the proposal.

The bidder’s own share price is likely to remain important because every movement in Brave Bison changes the market value of the share consideration. A recovery in Brave Bison shares could strengthen the perceived economics without another formal increase, while further weakness would widen the gap between the headline 360 pence value and the amount shareholders can infer from prevailing market prices.

The fourth offer has therefore sharpened rather than settled the contest. Brave Bison has increased the exchange ratio and assembled meaningful shareholder support, but System1 has responded with its own bloc of stated opposition and a valuation argument centred on current prices. The next decisive evidence will be the level of formal acceptances rather than another round of competing claims about what the transaction is theoretically worth.

Key takeaways on Brave Bison’s fourth takeover offer for System1 Group

• System1 Group has unanimously rejected Brave Bison’s fourth takeover proposal announced in September.
• The principal offer comprises 135 pence in cash plus 2.394 new Brave Bison shares for every System1 share.
• Brave Bison values the proposal at 360 pence per System1 share using a July reference price, implying approximately £47.5 million of equity value.
• System1 calculates that the offer was worth about 328.9 pence using Brave Bison’s September 15 closing price of 81 pence.
• System1 itself closed at 335 pence on September 15, placing the current market value above the offer when calculated using Brave Bison’s latest closing price.
• Brave Bison already owns approximately 27.85% of System1 and says its stake plus letters of intent represent around 38.9% of the issued share capital.
• The takeover requires Brave Bison to secure more than 50% of System1 voting rights before the acceptance condition can be satisfied.
• System1 says shareholders representing approximately 22.89% have provided written confirmations that they currently do not intend to accept the offer.
• System1 expects fiscal 2027 revenue of approximately £38.8 million and adjusted profit before tax of around £4.2 million based on previously published consensus expectations.
• The outcome now depends heavily on additional shareholder acceptances and the market value of Brave Bison shares forming part of the consideration.