What was in the update?
For those that aren’t aware, on April 12 Bravura Solutions tabled a $2.50 cash per share non-binding indicative takeover proposal.
This was a 36.9% premium to the trading day volume-weighted average price (VWAP) from the release of GBST’s half year results on February 13 to April 11. It was also a 30.4% premium to the 30-trading day VWAP to April 11.
In its release, Bravura stated that it believes the proposal provides a number of benefits to GBST shareholders. These include an attractive premium, certain value, and reduced uncertainty.
The latter was in respect to the uncertainty and costs associated with the significant investment to renew GBST’s software platforms. This includes the E-VOLVE program to bring its Composer platform to modern standards and the changes required as part of the ASX CHESS transition to blockchain technology.
However, GBST’s update reveals that some shareholders aren’t convinced by the offer.
According to the release, the board and its advisers are still conducting a careful assessment of the proposal, but note that “a number of shareholders have expressed concerns with respect to aspects of the Indicative Proposal which go to value and certainty.”
This includes Bravura’s “request to conduct due diligence to its satisfaction, particularly in light of the fact that it is a direct competitor of GBST.”
As a result, the board has engaged with Bravura and its advisers to further understand its position.
For now, the board advises that shareholders continue taking no action in relation to the proposal and will continue to keep the market informed of any material details in accordance with its continuous disclosure requirements.
Whilst this update casts a doubt on the takeover, I remain optimistic that a deal will be reached in time.
However, due to the uncertainty that this update has created, investors may want to sit tight and wait for further developments before considering an investment in either company.