The Redflex Holdings Limited (ASX: RDF) share price has been an incredibly strong performer on Friday.
The innovative intelligent transport solutions (ITS) technology company’s shares were up as much as 122% to a multi-year high of 89 cents at one stage.
At the time of writing, the Redflex share price is up 115% to 86 cents.
Why has the Redflex share price doubled in value today?
Investors have been fighting to get hold of Redflex shares today after it announced the receipt of a takeover approach.
According to the release, the company has entered into a binding scheme implementation agreement with Nasdaq-listed Verra Mobility Corporation.
This agreement will see Verra Mobility acquire 100% of the share capital of Redflex by way of a court-approved scheme of arrangement in an all-cash offer of 92 cents per share. This values Redflex at $146.1 million.
Verra Mobility’s offer represents a 130% premium to Redflex’s last close price of 40 cents and a 132% premium to its one-month volume weighted average price (VWAP).
What now?
The Redflex board of directors unanimously considers the scheme to be in the best interests of shareholders and recommends that they vote in favour of the scheme. This is subject to an independent expert concluding, and continuing to conclude, that the scheme is in the best interests of shareholders and there being no superior proposal.
Redflex Chairman, Adam Gray, commented: “The Board of Redflex has reviewed over the past year a wide range of strategic alternatives with a view to achieving maximum value for Redflex shareholders. After careful consideration the Board has come to the unanimous conclusion that the Scheme is in the best interests of shareholders.”
“The Scheme provides Redflex shareholders with an opportunity to realise certain and immediate value for their shares, at a significant premium to recent trading and at an attractive valuation multiple. We are pleased that a leading industry player such as Verra Mobility has recognised the strategic value of our company,” he concluded.
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Motley Fool contributor James Mickleboro 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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