The Praemium Ltd (ASX: PPS) share price is up 4.12% in late afternoon trading after an initial slow gain of 2% in morning trade.
Praemium’s share price is edging higher after news its offer to Australian wealth management platform Powerwrap shareholders is now totally unconditional. Praemium expects the offer to close on 21 September and urges Powerwrap shareholders to accept the offer “without delay”.
On July 9, Praemium first announced its takeover offer for Powerwrap.
What does Praemium do?
Praemium is global provider of technology platforms for managed accounts, investment administration and financial planning. Its fully integrated account management platform is suitable for both small and large account holders, enabling clients to see all their portfolios in one place. Its platform is used across the world by almost 1,000 financial institutions and more than 500,000 investors.
Praemium was founded in 2001, and Praemium shares began trading on the ASX in 2006. The company is based in Australia.
What did Praemium offer to Powerwrap shareholders?
On 9 July, Praemium announced a $55.6 million cash-and-scrip takeover offer for Powerwrap Limited. At that time Praemium already owned 14.7% of Powerwrap. Its offer covers all the remaining shares of Powerwrap it does not already own.
Praemium offered Powerwrap shareholders 7.5 cents cash and one Praemium share for every two Powerwrap shares they hold. According to the company, that represented an 82.3% premium to Powerwrap’s 90-day volume weighed average price (VWAP).
The initial offer came with conditions including 90% minimum acceptance by Powerwrap shareholders. As of this morning, the offer is unconditional.
Together, the group’s funds under administration (FUA) would exceed $27 billion.
What the management says
Both Powerwrap’s chair and Praemium’s CEO were positive about the offer.
Addressing the initial offer, Powerwrap chair Anthony Wamsteker said:
Powerwrap’s board believes the offer presents an excellent opportunity for Powerwrap shareholders to participate in the upside of a merged group that stands to benefit from significant potential synergies. With Powerwrap’s strong customer base and Praemium’s track record of profitability and cutting-edge technology, the benefits to Powerwrap shareholders are clear to the board. We encourage Powerwrap shareholders to take this next step in the company’s journey.
Praemium CEO Michael Ohanessian said:
We know Powerwrap well as one of their core technology partners. Together we are stronger with significant synergies between the two companies and higher growth potential in a combined entity. We believe the merged company would be a formidable force in the Australian platform industry, and are happy that the Powerwrap board sees the value and has recommended that their shareholders accept the offer to share in the success of a larger and better combined company.
The Praemium share price is up more than 32% since it made the initial offer on 9 July.
In comparison, the All Ordinaries Index (ASX: XAO) is up less than 3% over that same time.
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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia has recommended Praemium Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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