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Should you buy Veda Group Ltd at this share price?

Credit: Mighty Travels

Veda Group Ltd (ASX: VED) has entered into a binding agreement with Equifax Inc whereby Equifax will acquire 100% of Veda Group’s outstanding shares.

Veda Group is one of Australia’s leading data analytics businesses, providing information to its clients regarding the credit histories of would-be customers. It listed on the ASX in 2013 with plenty of promise, particularly in light of the introduction of the Comprehensive Credit Reporting regime which provided a new avenue for growth.

In today’s announcement however, the board said that it unanimously recommended that shareholders vote in favour of the scheme being implemented. The decision implies the board’s belief that the price being offered takes into consideration the company’s growth potential over the coming years.

Equifax first launched a takeover bid for Veda Group in September this year, offering $2.70 per share outstanding. The price has since been increased to $2.825 per share, which implies a market capitalisation of roughly $2.5 billion for Veda Group, and represents a 41.6% premium over Veda Group’s closing price of $1.995 per share prior to the first offer being made.

As it stands, the shares are still trading roughly 2.7% below the offer price. While some investors will no doubt look to take advantage of the difference in price, it seems investors would now be better off looking elsewhere for superior returns.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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