The Think Childcare Ltd (ASX: TNK) share price is surging 33% today. The astronomical sum comes after the company received a revised offer from Busy Bees Early Learning Pty Ltd for a takeover.
At the time of writing, the Think share price is trading at $3.06 – up 32.47%. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 1.17% higher.
Let's take a closer look at today's announcement.
Think share price shoots higher on bidding war
The Think share price is on a tear. In a statement to the ASX, Think announced it had received a revised offer of $3.20 per share from Busy Bees to buy 100% of the company. This latest offer represents a 52% premium on its previous offer of $2.10 per share.
The price paid will drop by the amount of any dividend paid by the group after the date of the proposal. Think advised it would pay a dividend of at least 34 cents a share, fully franked, soon.
The offer of $3.20 is 192% higher than the volume-weighted average price (VWAP) for the last month.
Busy Bees is in a bidding war for Think with Alceon Private Equity. The two companies have been making offers for the childcare provider since November 2020. The Think share price has been rising with each offer.
For context, the first offer from Alceon was for $1.35 a share. Busy Bees followed this up with an offer of $1.75 a share.
After today's offer, Think is offering Busy Bees an exclusivity period to negotiate a deal until 14 May 2021.
If a deal were to go through it would be subject to several conditions, including:
- Due diligence requirements.
- Obtaining regulatory approval.
- The consent of Busy Bees' owner Mathew Edwards.
- The signing of documents, and
- Approval by the Think Board.
Alceon backing down?
Alceon already owns approximately 19% of Think through its subsidiary, NKT Investments Pty Ltd. As such, it has a powerful say on whether or not to accept any deal from Busy Bees.
Think, however, says that after communicating with Alceon, the private equity firm is prepared to support the Busy Bees offer. If that is the case, the Think share price should begin to stabilise.
Think share price snapshot
Over the last 12-months, the Think share price has increased 246.07%. Of course, the vast majority of the company's growing valuation has come as a result of the takeover talks.
Given its current share price, Think has a market capitalisation of $187.6 million.
