AdaptIT CEO Sbu Shabalala is positive about the cash offer from Canadian software group Volaris to acquire the company. Volaris is a subsidiary of Toronto-listed Constellation Software.
Adapt IT, which is listed on the JSE, recently said it has received a “firm intention” from Volaris to buy over 50% of the shares of Adapt IT for a cash consideration of R6.50 per share.
This cash offer represents a premium of 56.9% to the 30-day volume weighted average traded price of Adapt IT shares of R4.14 per share as at 26 January 2021.
Adapt IT said Volaris’ offer will be made by way of a scheme to be proposed to their shareholders.
“If the scheme is not proposed or fails, Volaris will make a general offer to the Adapt IT shareholders to acquire at least 50% of Adapt IT shares.”
If the scheme is implemented, Adapt IT shareholders will be entitled to elect to retain all or part of their Adapt IT shares and remain invested in Adapt IT as a delisted company.
Commenting on the offer from Volaris, AdaptIT CEO Sbu Shabalala told Biznews they are very interested in this transaction.
“It gives shareholders an exit price of R6.50 per share which was last seen in November 2018,” Shabalala said.
He added that AdaptIT’s management team has no plans to exit the business.
“The challenge for management was always the capitalisation of the business to have enough money for our future strategy. This transaction promises to do that,” he said.
Shabalala added that Volaris’ approach regarding the potential transaction has always been friendly.
Constellation Software has been in discussions with AdaptIT for some time, but they previously wanted to buy out the company. This was not accepted by AdaptIT’s management.
The new offer resolved the concerns AdapatIT’s management had, Shabalala said.
“When they approached us again in December 2020, they put a deal on the table which keeps management in place and create a vehicle for future growth,” he said.
They are now coming in as an investor in AdaptIT with a view on growth for the future. “It is a long-term strategy,” said Shabalala.
The successful conclusion of the Volaris offer will therefore give AdaptIT the backing of a well-capitalised leading global technology firm keen to support further growth.
The announcement about the Volaris offer comes after JSE-listed Huge Group said on 27 January that it had made an offer to Adapt IT shareholders to acquire all of the issued Adapt IT shares.
Huge Group offered Adapt IT shareholders a ratio of 0.9 Huge Group shares for every Adapt IT share.
That swap ratio is based on a reference price of R6.13 per Huge Group share which implied an offer of R5.52 per Adapt IT share.
“The subsequent reduction in the trading price of Huge Group shares would imply an even lower offer price per Adapt IT share,” it said.
Commenting on the Huge Group offer, Shabalala said while it remains an option, the Volaris offers makes more sense.
“Shareholders can take the Volaris cash offer, buy a Huge Group share, and still pocket some change – not only get 90%,” he said.