Why the Bingo (ASX:BIN) share price is shooting 18% higher

The Bingo share price is surging 18% today after the company released a statement regarding a potential buyer. Let’s take a closer look.

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Bingo Industries Ltd (ASX: BIN) shares are rocketing higher today following the company’s response to media reports of a potential acquisition proposal. At the time of writing, the Bingo share price is trading at $3.23, up 17.9% from yesterday’s closing price.  

What’s driving the Bingo share price?

The Bingo share price is on the move today after the company released a response to media reports that it had received a takeover offer from CPE Capital. Describing the offer as an “unsolicited, highly conditional, non-binding, indicative proposal”, today’s announcement used a really good collection of words to let everyone know the acquisition is definitely not set in stone. 

The offer presented by CPE Capital comes with an indicative cash price of $3.50 per share, as well as a potential scrip alternative, and is currently being considered by a Bingo independent board committee.

According to Bingo, the proposal will be subject to several conditions, including due diligence and financing, if it proceeds.

Bingo’s latest investor presentation

During its latest investor presentation to UBS Group in November last year, Bingo claimed it had identified a five-year growth plan, invested in a strategic network of waste infrastructure, and strengthened the company’s overall financial position. 

Bingo also highlighted its capability to navigate through the COVID-19 pandemic and maintain solid momentum regardless of the associated lockdown restrictions.

During the presentation, Bingo further advised that all its FY20 development milestones had been reached and the company was now “utilising these assets to increase returns and cash flow”.

According to Bingo, the company is in a strong position with a well-developed pipeline of work spanning at least the next five years. 

Financial performance and sustainability

For FY20, Bingo finished up with underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $152.1 million. The company also gained a 21% boost to its revenue bringing it up to $486.7 million.

In addition to its key financial reports, Bingo also produces an annual sustainability report. According to the report, the company added value to society through various activities such as its school education program and donations to the Cancer Council. 

Bingo share price snapshot

Based on the current Bingo share price, the company has a market capitalisation of $1.8 billion with 654.3 million shares outstanding. Bingo shares reached a 52-week high of $3.47 in February last year just prior to the coronavirus-induced bear market.

The Bingo share price is currently trading a little over 8% lower than where it was this time last year.

Motley Fool contributor Gretchen Kennedy has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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