The Primero Group Ltd (ASX: PGX) share price has slipped today on news the company directors have accepted a takeover bid.
The company announced this morning that its directors, who own 30.42% of the company’s shares, have accepted NRW Holdings Limited (ASX: NWH)’s conditional off-market takeover bid.
The Primero share price has fallen almost 2% to 55 cents on the news , while the NRW share price dipped by 0.35% to $2.86 at the time of writing.
What else did today’s announcement say
Primaero advised that, as a result of today’s acceptances, NRW now has built up a stake of just over 48% of Primero shares.
The Primero directors continue to unanimously recommend that its shareholders accept NRW’s offer, which will expire on 22 January 2022.
In the announcement, NRW told Primero shareholders that by accepting the offer, they would be investing a financially stronger company with an attractive dividend policy. It also warned shareholders that the Primero share price may fall if the takeover was unsuccessful.
Details of the takeover offer
The takeover by NRW values Primero at an equivalent of 55 cents per share, or a total equity value of approximately $100 million.
Primero’s directors collectively own approximately 30.42% of Primero shares. Each of those directors had already confirmed in November of their intention to accept the offer in respect of all Primero shares they own. Primero also said that its management team would remain with the business under NRW ownership.
NRW meanwhile said that it will fund the acquisition through a combination of cash on its balance sheet, and a $50 million bank loan facility.
Both companies believe there are synergies to be achieved through this merger, which will allow the combined entity to expand to other pipelines businesses and opportunities.
A quick take on Primero and NRW
Primero provides engineering design, construction and operational services to the minerals, energy and infrastructure sectors. The Primero share price has risen by more than 60% in 2020, and it commands a market capitalisation of around $96 million.
NRW is a much bigger company than Primero, and provides contract services to the resources and infrastructure sectors across most states of Australia. The NRW share price has fallen 10% in 2020, and it commands a market cap of $1.2 billion.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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