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Is Qube’s takeover of Chalmers good value for shareholders?

The Qube Holdings Ltd (ASX: QUB) share price has edged 0.5% higher today as the company released its Bidder’s Statement in its pursuit for Chalmers Ltd. (ASX: CHR) – but is the acquisition good for shareholders?

What’s behind the Qube–Chalmers deal?

Last week, the Chalmers share price rocketed 44.7% higher after Qube announced its takeover intentions for the Aussie warehousing and storage company.

Qube put forward an off-market takeover offer for all the outstanding shares of Chalmers at a price of either 2.31 Qube shares per Chalmers share or $6.50 cash for each Chalmers share.

At that price, Qube’s deal would value Chalmers at approximately $60 million, to be funded from existing Qube debt facilities.

Even with last week’s share price jump on the takeover news, Chalmers is currently trading with a market cap of $52 million, meaning Qube doesn’t look to be low-balling on its offer.

Qube proceeded to acquire a substantial holding of Chalmers shares following the announcement, increasing its stake to 1,515,186 Chalmers shares with voting power of 19.90%.

What was announced this afternoon?

The Chalmers directors intend to unanimously recommend that Chalmers shareholders accept the Qube offer, in the absence of a superior proposal.

The offer is subject to a number of conditions, including Qube’s BidCo subsidiary acquiring a stake of at least 90% of Chalmers shares on issue.

The Chalmers board of directors strongly encouraged its shareholders to accept the bid, given the implied value of the scrip option was $7.00 (49% premium to pre-takeover share price) and the cash bid was $6.50 (38% premium to pre-takeover share price).

Is the deal good value for Qube?

While all signs point to the deal being good value for Chalmers, is it the same story for Qube shareholders?

Qube is a diversified logistics and infrastructure company, which currently operates across five business segments: bulk, infrastructure and property, logistics, ports, and strategic assets.

The company appears to be acquiring Chalmers to boost its supply chain management functions across wharf transport, warehousing, and stock handling, which could improve efficiencies for the group going forward.

The Qube share price is up 21.1% so far this year and has been steadily climbing, but there could be some short-term negative movements if Qube can’t realise the synergies built into the lofty valuation for Chalmers.

In the end, the smaller size of Chalmers means that the acquisition shouldn’t break the bank for the $4.9 billion Qube, however, I’d be waiting to see how this all pans out before considering investing.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. 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 Scott Phillips.

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