The Pushpay Holdings Ltd (ASX: PPH) share price has returned from its trading halt with a bang.
In morning trade, the donation technology companyâs shares are up 9% to $1.15.
Why is the Pushpay share price storming higher?
The catalyst for the rise in the Pushpay share price on Monday has been news that the company has accepted a takeover offer from the Sixth Street and BGH Capital Consortium.
Sixth Street is a global investment firm and BGH Capital is an Australia and New Zealand-focused private equity firm. Together, the two parties currently hold, in aggregate, 20.34% of the shares in Pushpay.
According to the release, Pushpay has entered into a scheme implementation agreement under which the consortium will acquire all of Pushpayâs shares at a price of NZ$1.34 (A$1.21) per share in cash via a scheme of arrangement. This represents a 14.7% premium to the Pushpay share price prior to its trading halt.
Why did Pushpay accept this offer?
The release notes that following a comprehensive process and a thorough consideration of strategic options, the Pushpay board believes the offer provides âcompelling value for shareholders.â
It highlights that while it is only a 14.7% premium to the last close price, it is a 30.1% premium to undisturbed share price on 22 April before takeover offers were first received. In addition, since then, the ASX All Technology index has declined 12.1%.
It implies an equity value of US$898 million and an acquisition multiple of 16x the midpoint of its revised EBITDAF guidance of US$56 million for FY 2023.
Pushpayâs Chair, Graham Shaw, commented:
In considering the options, including the possibility of continuing to implement the Companyâs growth strategy as a publicly listed company, the Board adopted a long-term view of the risks and rewards of various alternatives.
After a thorough assessment, the Board believes that the Sixth Street / BGH Consortium Scheme proposal currently represents the most compelling value for shareholders. Although the Board remains confident in the future of Pushpay, the transaction will accelerate a capital return to shareholders and mitigates the risks that would otherwise be involved in delivering the opportunities from executing Pushpayâs strategic plan over time. Accordingly, the Board is pleased to unanimously recommend the transaction to shareholders.
The post Pushpay share price rips 9% ahead on takeover agreement appeared first on The Motley Fool Australia.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PUSHPAY FPO NZX. The Motley Fool Australia has positions in and has recommended PUSHPAY FPO NZX. 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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