The DUET Group (ASX: DUE) share price is likely to leap upwards today following a recommendation by its board to accept a takeover.
In a statement to the ASX, the $7 billion energy and utility asset owner said its boards had approved a scheme deal from a consortium which valued the business at $3.03 per share.
The consortium includes Hong Kong listed Cheung Kong Infrastructure Holdings Limited (CKI), Cheung Kong Property Holdings Limited (CKP) and Power Assets Holdings Limited (PAH). These public entities are worth a combined $87 billion, according to Google Finance.
The Scheme offer follows months of due diligence by the consortium, having first approached DUET in late 2016.
"On 10 November 2016, the Consortium approached DUET with a confidential, indicative, non-binding proposal to acquire DUET for $2.90 per stapled security, subsequently increased to $3.00 per stapled security as announced in December," DUET Chairman, Doug Halley, said. "DUET's boards consider that the total cash proceeds of $3.03 per stapled security, inclusive of a special distribution payment by DUET, fully recognise the value and future growth platform that our management team has created and the operating and financing synergies available to the Consortium".
The deal represents a 28.9% premium to DUET's closing price in early December, prior to its initial announcement to the market. DUET security holders also stand to receive the interim distribution of 9.25 cents per share in February, with the deal set to finalise in May (subject to a number of conditions).
Buy, hold or sell
The deal is subject to a number of conditions, including approval by the Foreign Investment Review Board (FIRB), which presents some uncertainty over the deal. This may result in shares trading below the offer price and enable investors to make a quick profit if the deal goes ahead. However, this is not without risk.