The NWH share price jumped 3.7% to $3.10 in late afternoon trade while the PGX share price added around the same amount to 60 cents a share.
NRW Holdings is trying to entice any Primero shareholders holding out from accepting the $100 million offer with accelerated payment terms.
NWH takeover of PGX fait accompli?
The bidder is promising to pay PGX shareholders within 10 days of valid acceptances and the share price of the target suggests that the takeover is all but a done deal.
NRW is offering 27.5 cents cash plus 0.106 of NRW shares in exchange for each PGX share. At the current NWH share price, this implies an offer price of 60 cents for the target.
If NRW gets 90% of PGX, it can compulsorily acquire PGX. Any target shareholders who do not tip their stock into the bidder’s hat before then will have to wait longer to receive their payment.
NRW share price growing via acquisitions
Some of Primero’s shareholders were holding out hope that NRW would increase its offer price. But the highly acquisitive NRW board held firm. The buyer recently bought BGC Contracting in December 2019 and parts of RCR Tomlinson’s businesses in January of that year.
The latest takeover will help NRW expand its capabilities across civil, mining, mining technology and drill and blast contracting.
There’s been a fair bit of mergers and acquisitions (M&As) in the mining services space recently. Both Downer EDI Limited (ASX: DOW) and Lendlease Group (ASX: LLC) have or are in the process of selling these businesses to other trade buyers.
What’s driving strong M&A activity
But M&A activity won’t be confined to this sector. Record low interest rates are one big factor behind the expected pick-up in takeovers.
Money has never been this cheap before and would-be acquirers should have a relatively easy time to raise needed funds.
Further, cashed up companies (and there are quite a few of them despite COVID-19) are looking to grow revenues and profit.
They will see acquisitions as a relatively quick way to achieve this goal. Just be conscious that most M&As actually leave shareholders of bidders worst off.
Other ASX stocks in the spotlight
But this won’t stop a flurry of activity in 2021. The Tabcorp Holdings Limited (ASX: TAH) share price is the latest to be touched by such speculation as it could divest its struggling wagering division.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Brendon Lau owns shares of AMP Limited. 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.
- This underperforming ASX large cap is sitting on a ~10% dividend yield – April 16, 2021 5:00pm
- The Monadelphous (ASX:MND) share price surges as Rio Tinto (ASX:RIO) overhang lifts – April 16, 2021 1:18pm
- Is the Afterpay (ASX:APT) share price set to surge later this month? – April 15, 2021 11:06am