Huge Group is offering to purchase all of the issued Adapt IT shares at 552 cents a share, valuing the company at R795 million, and the group said the offer represented a 33 percent premium on its 30-day weighted average traded price on January 26.
Adapt IT said the offer consideration from Huge is a swop ratio of 0.9 of a Huge share for every one Adapt IT share tendered.
“The swop ratio is based on a reference price of 613c per Huge share and an implied price of 552c per Adapt IT share,” Adapt IT said.
Adapt IT’s share price leapt by more than 12 percent yesterday morning to a day high of R5.21, up from Wednesday’s closing price of R4.01.
However, the share price was still down by 72 percent compared to its high of R16.50 achieved in October 2016.
Adapt IT’s share price has been on the mend in the past six months, recovering from R1.17 recorded at the end of September last year.
Adapt IT said the deal was conditional on Huge Group receiving shareholder approval from its shareholders in terms of section 9.20 of the JSE Listings Requirements and the Takeover Regulations Panel having issued a compliance certificate in relation to the offer.
“As the offer is conditional on the approval by Huge shareholders, Adapt IT will keep shareholders informed and up to date on this process,” the group said.
Peter Takaendesa, the head of equities at Mergence Investment Managers, said Huge’s offer to Adapt IT shareholders was opportunistic and probably not enough to get all Adapt IT shareholders to accept the deal.
“Ultimately, it will all come down to how Adapt IT shareholders view the potential upside in Huge shares offered to them in exchange compared to simply holding on to their Adapt IT shares that are down about 70 percent from their peak a few years ago,” Takaendesa said.