The RedHill Education Ltd (ASX: RDH) share price has been a very strong performer on Monday.
In afternoon trade, the education and agency services provider's shares are up 18% to 91 cents.
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Why is the RedHill Education share price storming higher?
Investors have been bidding the RedHill Education share price higher today after it provided yet another takeover update.
Hot on the heels of the collapse in talks between RedHill Education and UCW Ltd (ASX: UCW) last week, this morning the company announced its entry into an indicative, non-binding term sheet with iCollege Ltd (ASX: ICT).
According to the release, this follows iCollege's decision to increase its off-market takeover offer from 7.6 to 9.5 iCollege shares for each RedHill share, subject to satisfaction with the findings of due diligence.
Based on the iCollege share price at the close of play on Friday of 11 cents, this implies an offer of ~$1.045 per share.
The release notes that both the iCollege and RedHill boards and management teams have held several collaborative discussions to better understand the contribution of each business to a potential merged entity. These discussions culminated in an agreement to further investigate what appears to be a sound strategic rationale including synergies, geographic spread and education sector expansion.
iCollege's Chairman, Simon Tolhurst, commented: "iCollege has been encouraged by the collaborative approach taken by the RedHill Board which has seen agreement reached on next steps. iCollege has considered all additional stakeholder feedback and decided, that subject to entering into a Bid Implementation Agreement with RedHill and satisfactory mutual due diligence the share exchange ratio will be increased to 9.5 iCollege shares ($1.05 per RedHill share). iCollege believes that this agreement provides RedHill shareholders with a reasonable and fair value."
What now?
RedHill's directors note this is only an indicative offer. As such, it warned that there is no binding agreement and no certainty a transaction will ultimately be agreed with iCollege.
In light of this, it recommends shareholders continue to take no action in relation to the offer. In the meantime, the company advised that it will continue to keep shareholders informed of any material developments and is committed to acting in the best interests of all shareholders and to maximising shareholder value.
