THE PROTRACTED bidding war for the acquisition of Adapt IT ratcheted up another notch on Friday after the Huge Group ramped up its bid to about R1.3 billion for the specialised software and digitally-led business solutions company.
The market welcomed the move. Huge Group’s shares closed 9.32 percent higher at R5.75 on Friday, while Adapt IT’s shares leapt 8.64 percent to R6.79.
Huge revised its offer to 909 cents per Adapt IT share and a swop ratio of 1.37 Huge shares for each Adapt IT share, up from a swop ratio of 0.9 Huge shares per Adapt IT share.
In January Huge Group tabled an unsolicited offer of 55c a share for the entire issued share capital of Adapt IT, valued at R795 million.
However, since then Adapt IT’s share price has rallied, fuelled by the news of its proposed acquisition, and it reached a high of R7.20 when Canadian-based software company Volaris Group last month entered the race for its takeover, offering 650c a share.
Huge on Friday said the closing date of the revised offer had been extended from July 23 to July 30.
“The Huge board has procured irrevocable undertakings from Huge shareholders holding 75.71 percent of the issued share capital of Huge to vote in favour of all and any shareholder resolutions necessary to implement the revised Huge offer and the proposed transaction,” it said.
The increased bid comes hot on the heels of independent expert Nodus Capital TS recommending that Adapt IT shareholders reject Huge Group’s offer, saying it was unfair and unreasonable to its shareholders.
The board said a fair price range for an Adapt IT share would be a minimum of 700c, a maximum of 909c, and a most likely price of 805c to set fair and reasonable price parameters. The bidding war has become messy. In April, Huge got into trouble after it was ordered by the Takeover Regulation Panel, which regulates mergers and acquisitions in South Africa, to remove online videos that urged Adapt IT shareholders to accept its bid while it bashed the Volaris offer.
The leadership of Adapt IT at this critical time is also under strain after its chief executive, Sbu Shabalala, came under fire earlier this month following a newspaper report that he was allegedly involved in ordering a violent attack. The report led to Shabalala agreeing to go on leave for three months. Adapt IT had since appointed chief commercial officer Tiffany Dunsdon as acting chief executive. Meanwhile, Huge is expected to release its results today.
In a trading update last week, Huge flagged that its earnings per share would be between 35.02c and 40.27c, or between 39.2 percent and 30.1 percent lower than in the comparative period, while its headline earnings per share would be between 39.98c and 45.98c, or between 29.9 percent and 19.4 percent lower than in the comparative period.
