French consulting giant Capgemini SE (EPA: CAP) has announced it will buy Australian digital services provider RXP Services Ltd (ASX: RXP).
RXP is very much a small cap on the ASX, with a market capitalisation of under $60 million before the ASX opened Wednesday. Capgemini is a multinational worth $32 billion.
Capgemini will pay $95.5 million in cash for a 100% acquisition, equating to 55 cents per share.
RXP shares closed Tuesday at 34 cents – but exploded on Wednesday to be 54% up at 11:08 am AEDT, to hit 52 cents.
The buyout shows its intent in the Asia-Pacific, according to Capgemini.
“The acquisition of RXP Services will make Capgemini a market leader in Australia in digital, data and cloud,” said Capgemini Asia-Pacific and Middle East executive chair Luc-Francois Salvador.
“Both companies share similar values and vision of the role of technology and humanity in successfully transforming businesses and society. Our strengths will enable us to use insights, design and technology to create inclusive and sustainable futures for our clients.”
The transaction is currently undergoing all the necessary legal, regulatory and shareholder approvals and is expected to close in March 2021.
Carrot for existing shareholders
The RXP board stated Wednesday morning that it unanimously recommended the deal be accepted.
“The RXP board believes the offer from Capgemini represents an excellent opportunity for RXP shareholders to realise certain value at a significant premium.”
If shareholders approve the buyout a special dividend of 5 cents per share may be paid, although this amount would be taken out from the final 55 cents sale price.
The company already provides a fully franked yield of 10.29%.
RXP founder and chief executive Ross Fielding’s stake would turn into a $5 million payday when the buyout closes.
“I am very excited for the growth opportunities this will create for our 550 employees within a global and culturally aligned business,” he said.
“RXP’s valued clients stand to gain from an integrated group through increased scale.”
Once the deal is completed, RXP would become a wholly owned subsidiary of Capgemini.
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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