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Superloop share price jumps higher on QIC takeover offer

One of the best performers on the All Ordinaries index on Friday morning has been the Superloop Ltd (ASX: SLC) share price.

At the time of writing the shares of the independent provider of connectivity services are up 5% to $1.90.

Why is the Superloop share price on fire?

Investors have been fighting to get hold of Superloop’s shares this morning after it revealed that it has received a takeover approach from QIC Private Capital on behalf of its Global Infrastructure managed and advised funds and clients.

According to the release, just over a month ago on April 2 the company received an unsolicited, non-binding, conditional and indicative acquisition proposal of $1.90 per share from QIC Private Capital. At this point its shares were trading at $1.46.

Then on April 26 QIC Private Capital returned with a further revised non-binding, conditional, and indicative proposal to acquire the company for $1.95 per share.

The revised indicative proposal includes two alternative forms of consideration to Superloop shareholders: full cash or partial cash and partial scrip in a newly formed unlisted entity.

The Superloop board and its advisers have been reviewing the proposal and determined that it is in the best interests of shareholders to grant QIC Private Capital a period of approximately three weeks to conduct due diligence on an exclusive basis.

This has been granted in order to establish whether an acceptable binding transaction can be agreed. The exclusivity period commenced on April 28 and may be extended for an additional period by mutual agreement.

Prior to today, Superloop’s shares were up a sizeable 29% since April 3 despite there being no news out of the company.

As a comparison, the All Ordinaries index was up less 1%, which may be an indication that details of this proposal leaked out at the start of April when the initial offer was made. No reason was given for not disclosing the approach when it first happened or when it granted due diligence.

Should you invest? 

I like Superloop, but with its shares trading within a couple cents of QIC Private Capital’s offer, I wouldn’t be a buyer now.

Instead, I would suggest investors look at the likes of Megaport Ltd (ASX: MP1) and NEXTDC Ltd (ASX: NXT) instead.

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James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MEGAPORT FPO and SUPERLOOP FPO. The Motley Fool Australia has recommended MEGAPORT FPO and SUPERLOOP FPO. 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 Scott Phillips.

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