Shares of insurance comparison website iSelect Ltd (ASX: ISU) have jumped more than 8% today after the company revealed it has received a takeover offer, despite the loss of yet another CEO.
Change of Leadership
For iSelect, it's been like a game of musical chairs ever since the company went public in July 2013. Shortly after the float of the shares, its then-CEO Matt McCann departed unexpectedly to be replaced by Alex Stevens.
Now, Stevens has also announced his resignation, effective immediately, citing his ambitions to pursue "new career opportunities outside of iSelect." iSelect's Commercial Director, Mr Scott Wilson, has now been appointed as CEO.
A Takeover Target
In the same announcement to the market today, iSelect said that it has received a "confidential, indicative, non-binding and conditional proposal" from an international private equity firm looking to acquire all of the company's issued shares.
Although the private equity firm remained unnamed, a report in The Australian Financial Review revealed the bidder as the US-based Providence Equity Partners. The bid price is also said to be below $2 a share, which compares to the current price tag of $1.66.
Management of iSelect said: "If the proposal does not proceed, the board intends to implement a range of capital management initiatives, including an on-market buy-back." This was outlined at the company's full-year earnings announcement in August, but will not be implemented before the completion of negotiations with the potential bidder.
What Happens Now?
Investors have been left disappointed with how iSelect has performed since going public in 2013, with its shares falling almost 6% since then. In August, the shares also fell sharply when it announced its full-year earnings results with investors clearly underwhelmed by the company's progress.
As such, many investors will likely be relieved to hear private equity could be lining up to take the company off their hands. Due diligence is expected to take several weeks and although there is no certainty that a transaction will occur, the board does believe it is in the interests of shareholders to progress with the proposal.
