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Huge Group increases bid for Adapt IT by 65%

Huge Group, it seems, doesn’t give up without a fight. The telecommunications specialist has dramatically increased its all-share offer for Adapt IT, the JSE-listed software services group also being pursued by Canada’s Volaris Group.

Huge has increased its offer to buy out Adapt IT shareholders from R5.52/share to R9.09/share – that’s a 65% increase in the offer price. Previously, the swap ratio was 0.9 Huge shares for each Adapt IT share tenders; that’s now increased to 1.37 Huge shares.

The new R9.09 offer price is at the very top end of the valuation attached to Adapt IT by independent expert Nodus Capital, which was appointed by the Adapt IT independent board to determine a fair value for the business.

Nodus Capital determined that Huge Group’s R5.52/share offer price was unfair and unreasonable.

“The independent expert concluded that a fair price range for Adapt IT shares is R7 to R9.09,” Huge Group said. “Huge notes the independent board’s opinion that a fair price range for an Adapt IT share would be a minimum of R7, a maximum of R9.09, and a most likely price of R8.05 … (and that) an offer consideration that falls within the fair and reasonable price parameters would be fair and reasonable.”

Huge said it has sufficient but unissued securities available to settle the revised offer. The closing date of the revised offer is 30 July.

It has also secured irrevocable undertakings from shareholders holding 75.71% of its shares that they will vote in favour of any shareholder resolutions necessary to implement the revised offer and the transaction.

The ball is now very much in Volaris Group’s court. The Canadian investment firm has offered R6.50/share in cash to buy out Adapt IT shareholders but may now have to sweeten its offer.

Adapt IT shares jumped 8.8% on the news of Huge Group’s revised offer, although at R6.80 they are still trading well below the R9.09 offer price; Huge Group also jumped, adding 9.3% and erasing most of the decline incurred in recent days. MoneyWeb

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