Smartgroup shares plunge as suitor lowers takeover offer

Smartgroup shares plunge as suitor lowers takeover offer

Shares in Smartgroup (ASX: SIQ) have fallen back to where they were four weeks ago after the fleet management company revealed this morning it had terminated discussions with a suitor consortium comprising TPG Global LLC and Potentia Capital.

The company, whose services also include novated leasing and salary packaging, had previously been on a high after the consortium entered due diligence with an indicative but conditional $10.35 per share offer that would have valued Smartgroup at $1.38 billion.

However, doubts from the investment community were seen in the market price hovering around the $9.35 per share mark since the offer was made, prompting the consortium to lower its proposal to just shy of that level.

"The consortium has informed Smartgroup that it does not intend to proceed with the proposal to acquire Smartgroup at $10.35 per share," the company announced today.

"The Consortium has expressed its interest to proceed with a revised proposal at a reduced offer price of $9.25 per share in cash, which would represent a 17.7 per cent premium to the closing share price on 28 September 2021 and a 23.8 per cent premium to the 90-day volume weighted average price."

Despite this potential premium, Smartgroup are playing hardball and have exited discussions anyway.

"The board decided to explore the original proposal in the interests of Smartgroup shareholders. Having received advice of the consortium’s intentions over the weekend, the board has unanimously concluded not to proceed with discussions," the group stated.

"The company’s focus continues to be the delivery of sustained earnings and dividend growth for Smartgroup shareholders. The company is currently on track to deliver CY21 financial performance in line with consensus expectations."

At the time of writing SIQ shares are down 15.47 per cent at $7.895 each.

 

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