System1 Rejects Major Shareholder's £43.1m Offer

The Board of ad effectiveness insights firm System1 has rejected a bid from its largest shareholder, ad group Brave Bison, saying the share-based deal equivalent to around £43.1 million 'materially undervalues' the company.

Brave Bison acquired its 28% stake in the company on 2nd March this year, by way of a share-for-share exchange with John Kearon, System1's founder and until then largest shareholder. Kearon, who now holds an 8% stake in Brave Bison, said at the time: 'I'm delighted to be rolling my equity interest in System1 into Brave Bison. I firmly believe that with Brave Bison's shared ambition, vision, and support, System1 will be best able to fulfil its growth potential and create a braver, brighter future.'

The price offered this month for the full buyout is just over 20 times System1's Financial Year 2026 operating profit of £2.11 million. An initial proposal on 8th June 'represented no premium to the System1 share price at that time', according to the System1 Stock Exchange response, and would have led to System1 shareholders holding approximately 24% of the enlarged Brave Bison. After a 'period of dialogue' and a further proposal on 11th June representing a 4% premium, the Board has rejected the bid, noting a sustained rise in the System1 share price since its results announcement.

The Board believes the Revised Proposal does not reflect this positive outlook including record revenue and strong new business.

System1's flagship product, Test Your Ad, measures audience's emotional responses to advertising second-by-second, and scores creative against a database of more than 120,000 ads and 18 million emotional responses. The company reported full-year revenue of £37m for the year ended 31st March 2026, broadly unchanged from the previous year, and profit before tax fell to £2.1m from £5.3m, reflecting planned investment and weaker trading conditions during the first half. Despite lower earnings, the company retained a debt-free balance sheet and proposed an increase in its ordinary dividend; and strong second half results and new business have helped drive up the share price since March. It's also worth noting that the company enjoyed a boom year in FY 2025.

Brave Bison's first half 2026 performance was supported by recent acquisitions and saw net revenue up 97% year-on-year to £23.7m, while adjusted EBITDA rose 87% to £4.2m.

The proposal notes the complementary nature of the two businesses and suggests a buy 'would create AIM's challenger marketing data and technology company, with pro-forma net revenues of £79 million and Adjusted EBITDA of £14 million' - not including potential cost savings. The enlarged group 'would have a highly desirable revenue mix,' the majority from high-margin, scalable platform solutions, and diversified across the UK, EU and US - and 'would be likely to gain inclusion in the AIM 100 Index, increasing its relevance to institutional investors and materially expanding its potential shareholder base,' according to Brave Bison.

in the proposal, Brave Bison said following the acquisition it would restructure its operations around three operating divisions including a Marketing Effectiveness division, led by System1 Chief Exec James Gregory (pictured). In its reply the System1 Board clarified that 'no specific role or rewards were discussed with James Gregory, and this has not been agreed.'

System1's reply notes 'A further announcement will be made if and when appropriate. Shareholders are advised to take no action at this time.' Brave Bison, which is already the owner of insights consultancy MTM London, currently has until 7th August to make a revised offer for System1.

The firms are on the web at www.system1group.com and www.bravebison.com .