Pegasus said on Friday that the 425p per share in cash or new shares bid by Sage "significantly undervalues" its value although it "understands the strategic attraction of its business to Sage".
However, a report compiled a week ago by City analyst UBS said it "would be surprised if Sage paid much in excess of 400p" and advised Pegasus shareholders to sell. The report says that "Pegasus is not central to Sage's strategy... and we expect the price to reflect that." The report also points out that the acquisition would help protect Sage against a US company attacking the UK market.
Pegasus declined to comment further while Sage management could not be contacted this afternoon.