Why the Rhipe (ASX:RHP) share price is surging 21% higher today

Another ASX company has received a takeover approach…

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The Rhipe Ltd (ASX: RHP) share price has returned from its trading halt with a bang this morning.

At the time of writing, the leading cloud and technology solutions provider’s shares are up a sizeable 21% to a 52-week high of $2.53.

Why is the Rhipe share price rocketing higher?

Investors have been scrambling to buy the company’s shares this morning after it confirmed that it has received a takeover approach.

According to the release, Rhipe has received a confidential, non-binding, conditional proposal from Norway-based Crayon Group to acquire 100% of the shares in Rhipe by way of a scheme of arrangement for $2.50 per share. This represents a 19.6% premium to its last close price.

It is worth noting also that Crayon’s offer will be reduced by any dividends or distributions declared by Rhipe after the date of the proposal.

What are the terms?

The release notes that Crayon’s proposal assumes a net cash position of Rhipe at closing of at least $31 million.

It also advised that the proposal states that any final, binding offer would be subject to a number of conditions. This includes the satisfactory completion of confirmatory due diligence and negotiation of a scheme implementation deed, unanimous and continuing recommendation of the Rhipe Board, and no material adverse changes occurring in relation to Rhipe.

There are also customary conditions including Rhipe shareholder approval, FIRB approval, and other requisite regulatory approvals.

What now?

Following a detailed consideration of the proposal, after consultation with its appointed advisors, the Rhipe Board has decided to allow Crayon to undertake limited confirmatory due diligence on a non-exclusive basis. This is being done to enable Crayon to present the Rhipe Board with a satisfactory binding proposal.

However, the company has warned that there is no certainty that Crayon will submit a satisfactory binding proposal. As a result, it has advised Rhipe shareholders to take no action at this time.

Should you invest $1,000 in Rhipe right now?

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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