CSG share price rockets 30% higher on Fuji Xerox takeover approach

The CSG Limited (ASX:CSV) share price has rocketed 30% higher following a takeover approach from Fuji Xerox…

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It certainly has been a positive day of trade for the CSG Limited (ASX: CSV) share price.

The full-service print and business technology solutions provider’s shares have rocketed 30% higher to 30.5 cents on Thursday.

Why is the CSG share price rocketing higher?

The catalyst for today’s impressive share price gain was news that CSG and Fuji Xerox have entered into a scheme implementation deed.

Under this deed it is proposed that Fuji Xerox will acquire CSG for a cash consideration of 31 cents per share by way of a scheme of arrangement. This remains subject to shareholder and court approval.

This offer values CSG’s issued equity at $140.8 million and enterprise value at $181.6 million. The release explains that the transaction will be funded from Fuji Xerox’s existing cash reserves.

Board approval.

According to the release, each member of the CSG board recommends that shareholders vote in favour of the scheme. This is in the absence of a superior proposal and subject to the independent expert concluding that the offer is in their best interests.

The directors believe Fuji Xerox’s offer is compelling for shareholders. This is because it is a 31.9% premium to the last close price, a 35.4% premium to the 1-month VWAP of its shares, and a 55.2% premium to the VWAP of its shares since the announcement of its FY 2019 results.

They also note that it provides certainty of value and is subject only to conditions customary for transactions of this type.

The company’s largest shareholder, Caledonia Investments, has advised that it intends to vote in favour of the offer. It holds a 29.1% stake in the company at present.

CSG Chairman, Bernie Campbell, said: “CSG is the ideal strategic fit for Fuji Xerox’s global business with our expertise in IT managed services and office solutions for the SME sector in Australia and New Zealand complementing Fuji Xerox’s leading print and technology operations.”

“The all-cash offer is attractive for shareholders and reflects the positive impact of the transformation achieved to date as part of our 2021 strategy. Our more than 10,000 SME customers across Australia and New Zealand will benefit from our long-term integration with Fuji Xerox through increased scale, broader product and service capability,” added Campbell.

“The Scheme provides certainty for our shareholders to realise value at a significant premium. It will also provide growth opportunities for our 670 employees within a global and culturally aligned business,” he concluded.

Also rising strongly on the ASX today are the shares of Dicker Data Ltd (ASX: DDR) and JB Hi-Fi Limited (ASX: JBH) following solid quarterly updates. 

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