Follows Extensive Private Engagement That Has Not Produced Meaningful Action
Converium Capital Inc. ("Converium"), which manages funds that own shares of CVS Group plc (LSE: CVSG) ("CVS Group" or the "Company"), today announced that it has sent a letter to CVS Group's Board of Directors (the "Board") highlighting the Company's undervaluation and urging the immediate initiation of a £100 million share buyback, equivalent to 12.5% of the Company's current market capitalization. Based on discussions with shareholders, Converium believes there is clear and broad support for this action.
Despite constructive engagement with the Board, and agreement that CVS Group is materially undervalued, Converium is concerned that no meaningful action has been taken.
Repurchasing the Company's materially undervalued stock today is the highest-return use of capital available to the Board. Acting decisively would re-engage investors who have grown skeptical of the Board's stewardship of shareholder capital.
The full text of Converium's letter is below.
May 12, 2026
CVS Group plc
CVS House
Owen Road
Diss, Norfolk IP22 4ER
Attention: David Wilton, Chairman
Dear Directors of CVS Group,
We write further to our recent correspondence and meetings. We appreciate your engagement in our discussions, and we are pleased that you agree that CVS Group's intrinsic value is not reflected in its share price. The Board has the responsibility and the means to address this persistent and substantial undervaluation.
The case for a large share buyback is straightforward, no alternative will achieve the same result, and the evidence has only strengthened since our initial correspondence. Although you indicated that a buyback would be considered, the Board's inaction in this matter is no longer tenable.
The Board should immediately initiate a £100 million share repurchase program, equivalent to 12.5% of the current market cap, to capitalize on its currently languishing share price. Based on our discussions with a substantial portion of the company's shareholder base, we believe there is clear and broad support for a large share buyback.
Shareholders have been patient. Since the Competition and Markets Authority's provisional decision on October 15, 2025, CVS Group's share price has declined 20%. This is striking, given the constraints the company operated under during the investigation: heightened scrutiny of corporate-owned vet clinics, sensitivity around service price increases, and an effective moratorium on U.K. acquisitions. A benign outcome to the investigation followed by an uplisting to the Main Market of the London Stock Exchange should have been catalysts for re-rating. They were not. Over a longer horizon the picture is even worse: three and five-year returns are each -49%. CVS Group's shares now trade at the same price as they did in 2017, when the company had less than half its current revenue, EBITDA, and net income. This calls for strong action.
At approximately 8x our estimate of current fiscal year EBITDA,1 CVS Group trades at a substantial discount to private market values for scaled veterinary platforms and even below the leverage levels carried by certain peers. The market is valuing CVS Group as if it were a single-location clinic rather than a multinational company with nearly 500 locations and a high-margin diagnostic lab business.
You have told us and your actions demonstrate that you agree that the shares are undervalued. Between October 2025 and January 2026, CVS Group repurchased £20 million of stock at an average price of 1,262p per share, roughly 13% above the current price. At today's share price, the case for a large buyback is even more compelling.
The company's balance sheet provides ample capacity to act. CVS Group carries leverage of less than 1.4x well below its conservative 2.0x target.2 The company can fund a £100 million buyback using available debt capacity and free cash flow while remaining below its leverage target. Even more capacity is available by normalizing capital spending. At 6% of revenue,3 capital spending is nearly double historical levels and higher than peers; reducing this spending would drive free cash flow materially higher.
A large share buyback also would not constrain the company's current strategy of acquiring additional vet clinics. Even while completing a £100 million buyback, the company could still allocate £45 million to acquisitions and remain within its leverage target.4 This amount is substantially greater than the company's acquisition spending in each of fiscal years 2025 and 2026. And the company retains the option to increase its leverage target to accommodate particularly accretive transactions. There is no trade-off.
Capital allocation matters.
Repurchasing the company's materially undervalued stock today is the highest-return use of capital available to the Board. Acting decisively would re-engage investors who have grown skeptical of the Board's stewardship of shareholder capital. It is critical to reduce the disconnect between CVS Group's public valuation and the prices that acquirors have paid for comparable businesses a gap that, left unaddressed, is likely to invite outside interest in the company.
We remain available to discuss the above, and we are continuing our dialogue with other shareholders in the meantime.
Best regards,
Michael Rapps
Managing Partner
1 All references in this letter to EBITDA are to the company's Adjusted EBITDA after deducting lease expenses.
2 Leverage is calculated as net debt excluding leases, to EBITDA.
3 Post-Covid annual average.
4 Measured based on Converium's estimate of fiscal year 2027 EBITDA. Assumes a £100 million buyback, £45 million of free cash flow over the next year, and £45 million of clinic acquisitions completed at 7.5x EBITDA.
About Converium Capital
Converium Capital is a multi-strategy opportunistic investment firm. Converium aims to deliver positive and uncorrelated returns regardless of macroeconomic conditions by investing in distressed and event-driven opportunities globally and across the capital structure.
Disclaimer
Neither this announcement nor the letter it relates to constitute an approach regarding a possible offer for CVS Group, and Converium is not actively considering any such offer and is not acting in concert with any person considering such an offer. Accordingly, neither this announcement nor the letter it relates to should have any consequence under Rule 2 of the Takeover Code.
Converium is making this announcement for general informational purposes only, and it is not intended to be and does not constitute or contain any investment recommendation as defined by Regulation (EU) No 596/2014 (as it forms part of the domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018). Nothing in this announcement is a statement of or indicates or implies any specific or probable value outcome in any particular circumstance. This announcement is not intended to be, nor should it be construed as (1) investment, financial, tax or legal advice, or (2) a recommendation to buy, sell or hold any security or other investment, or to pursue any investment style or strategy.
The information or opinions contained in this announcement do not constitute an inducement or offer to purchase or sell or a solicitation of an offer to purchase or sell any securities or other investments in CVS Group. Any person who is in any doubt about the matters to which this announcement relates should consult an authorised financial adviser or other person authorised under the UK Financial Services and Markets Act 2000. The views expressed by Converium in this announcement represent the subjective opinions of Converium. To the best of Converium's ability and belief, all information contained herein is accurate and reliable, and has been obtained from public sources that Converium believes to be accurate and reliable. However, such information is presented "as is", without warranty of any kind, whether express or implied. All expressions of opinion are subject to change without notice, and Converium does not undertake to update or supplement any of the information, analysis and opinion contained herein.
In relation to the United Kingdom, this announcement is being issued only to, and is directed only at, (i) investment professionals specified in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the "Order"), (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iii) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities of CVS Group may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "Permitted Recipients"). Persons who are not Permitted Recipients must not act or rely on the information contained in this announcement.
Converium currently has an economic interest in the securities of CVS Group. It is possible that Converium's interest will conflict with CVS Group and other parties' interest and there may be developments in the future that cause Converium to modify this economic interest at any time or from time to time. This may include a decision to sell all or a portion of its holdings of such securities in open market transactions or otherwise (including via short sales), purchase additional such securities (in open market or privately negotiated transactions or otherwise) or trade in options, puts, calls or other derivative instruments relating to such securities. Converium also reserves the right to take any actions with respect to its investment in CVS Group as it may deem appropriate, including, but not limited to, communication with the board of directors, management and other investors.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260512360194/en/
Contacts:
Investor Contact:
Michael Rapps
Converium Capital Inc.
mrapps@converiumcap.com
Media
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