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Why the Nuplex Industries Ltd share price jumped 27%

The Nuplex Industries Ltd (ASX: NPX) share price rocketed up 27.5% to $4.68 today after the resins manufacturer announced that it had received a takeover bid.

In an announcement to the ASX and New Zealand Stock Exchanges, Nuplex said it had received an indicative, non-binding, conditional, all-cash proposal from Belgium company Allnex valuing the company’s shares at NZ$5.55 each (roughly A$5.15).

Allnex is backed by private equity firm Advent International Corporation. Advent first approached Nuplex regarding combining the Allnex and Nuplex businesses to create a loading, global independent coating resins producer.

Nuplex’s board consider the offer attractive for shareholders, suggesting they will vote for the proposal to go ahead. However, Allnex and Advent have 6 weeks to perform exclusive due diligence, which could result in the offer not proceeding. Then there are the shareholder and New Zealand court approvals also required.

Given the level of uncertainty, that’s the most likely reason why the Nuplex share price on the ASX is trading at $4.68 – well below the Australian dollar equivalent offer of $5.15.

Nuplex will report its interim financial results on Thursday, 17 February.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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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