Smartgroup shares surge on $1.38 billion takeover offer from TPG Global, Potentia Capital

Smartgroup shares surge on $1.38 billion takeover offer from TPG Global, Potentia Capital

Fleet management, novated leasing and salary packaging company Smartgroup (ASX: SIQ) will open the books to suitors after receiving a takeover offer at a 32 per cent premium from a consortium comprising TPG Global LLC and Potentia Capital.

The consortium has advised Sydney-headquartered Smartgroup that Aware Super will also participate in the non-binding $10.35 per share proposal as an equity co-investor.

Smartgroup's board has indicated that based on current information it intends to unanimously recommend shareholders to vote in favour of the $1.38 billion proposal.

However, a potential arrangement is still subject to due diligence to the consortium's satisfaction, final approval from the board and the investment committees of TPG and Potentia, and the negotiation of terms.

"The board of Smartgroup has determined that it is in the interests of Smartgroup shareholders to grant the consortium a period of four weeks from opening the data room over the next week to conduct due diligence on an exclusive basis to establish whether an acceptable binding transaction can be agreed," the company reported today.

Smartgroup has appointed Macquarie Capital as its financial adviser and Herbert Smith Freehills as its legal adviser, and has advised shareholders there is no certainty a deal will go ahead, explaining they do not need to take any action at this time.

Sydney-headquartered Potentia has been active in the investment space this year, having also taken a majority stake in Gold Coast-based tourism property technology company NewBook in April.

At the time of writing, SIQ shares were up 17 per cent at $9.20 each.

Smartgroup reported an additional 13,000 salary packaging customers in the first half of this year, more than half coming from health sector clients, taking its total under management to 373,500 packages. Revenue for the six months was up 4 per cent at $109.4 million, but down 2 per cent on the prior corresponding period.

Nonetheless, NPATA remained stable and was up 5 per cent year-over-year at $33.5 million.

"We have seen good momentum from improved business conditions, including success in winning new clients and renewing existing key client contracts," CEO TIm Looi said in August.

"In particular, our strong renewal rate is a testament to the hard work of our team, the service we offer our clients and the loyal relationships we foster."

New lease vehicle orders increased to pre-COVID levels in the second quarter of the calendar year Smartgroup's financial reporting operates under, although vehicle supply disruptions have resulted in longer lead times, building a pipeline of future settlements.

"While the current economic disruption brought on by the COVID-19 pandemic is likely to negatively impact vehicle orders, Smartgroup’s business is in good shape operationally and we are well positioned for recovery and continued growth in orders when lockdowns ease," Looi said at the time.

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How communications technology can raise the bar on customer service, employee experience
Partner Content
From capturing feedback early to providing messages with a higher rate of cut-through, ...
Advertisement

Related Stories

'The largest event since the Olympics': SXSW goes Down Under with Sydney offshoot

'The largest event since the Olympics': SXSW goes Down Under with Sydney offshoot

For the first time in its 36-year history, the famed SXSW (South by...

Commercial tower at Sydney’s Green Square receives development approval

Commercial tower at Sydney’s Green Square receives development approval

A commercial tower designed with the changing nature of work in min...

Atturra looks to become an IT powerhouse after acquiring MOQ for $15.5 million

Atturra looks to become an IT powerhouse after acquiring MOQ for $15.5 million

Atturra (ASX: ATA) is looking to become one of the nation&rsqu...

Origin slapped with $17m fine for failing to protect vulnerable customers

Origin slapped with $17m fine for failing to protect vulnerable customers

Australian energy giant Origin Energy (ASX: ORG) has today been ord...