Huge Group has increased its offer to Adapt IT shareholders from an effective R5.52 per share to R9.09 per share.
It has therefore increased in the originally announced swap ratio from 0.9 Huge shares for each Adapt IT share tendered to approximately 1.37 Huge shares for each Adapt IT share tendered.
This revised offer comes after the Adapt IT board recommended that its shareholders reject the offer of Huge Group to acquire all the company’s issued shares.
In January, Huge Group offered to acquire shares in Adapt IT by issuing 0.9 ordinary shares in Huge for each Adapt IT share.
“This swap ratio is based on a reference price of 613 cents per Huge share and an implied price of 552 cents per Adapt IT share,” the Adapt IT board explained.
Independent expert Nodus Capital’s valuation, however, concluded that a fair price range for Adapt IT was R7.00 to R9.09 per Adapt IT share.
Adapt IT said while the Huge offer was higher than the traded price of Adapt IT at the time, this changed after Volaris also made an announcement to acquire over 50% of Adapt IT shares.
“The announcement of the Volaris offer and subsequent trading in Adapt IT shares in response to the Volaris offer has resulted in trading at prices significantly above the value offered in the Huge offer,” the board stated.
“As a result, Adapt IT shareholders who wish to realise their Adapt IT shares have alternative opportunities to do so for cash at a price greater than that of the Huge offer.”
Huge Group has now responded to the Adapt IT board’s decision by increasing its offer to the upper level of Nodus Capital’s valuation.
It highlighted that the consideration is not payable in cash, as the transaction is a share swap with a revised ratio from 0.9 to approximately 1.37 Huge shares.
“Huge offers to purchase from each Adapt IT shareholder all, or any, of their Adapt IT shares for a consideration equivalent to 909 cents per Adapt IT share,” it said.
Huge Group requested the independent board of Adapt IT to announce a response to offer within 5 business days.
The closing date of the revised Huge offer is extended from 23 July 2021 to 30 July 2021.