The Rhipe Ltd (ASX: RHP) share price is falling today after the company said it had agreed on terms with Norwegian company Crayon, to sell 100% of its shares for $2.50 each.
At the time of writing, shares in the company are trading for $2.48 – down 1.59%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.35% higher.
Let's take a closer look at this latest update.
Why the Rhipe share price is in focus
In a statement to the ASX, Rhipe confirmed it will recommend that shareholders accept the bid Crayon submitted last week. The news sent the Rhipe share price surging to a new 52-week high of $2.56.
The bid for $2.50 per share represents a 30% premium on the 1-month volume weighted average price (VWAP) and a 37% premium on the 3-month VWAP of $1.82. Rhipe intends to pay a special dividend of up to 13 cents a share, fully franked before the transaction is finalised. Any amount paid by the board will be deducted from Crayon's final payment. The deal is not conditional on finance or due diligence.
Shareholders should be able to vote on the deal in September, and if all goes to plan, the sale will be finalised by October.
In other news, Rhipe says its foreshadowed operating profit for FY21 of $18 million will be met. It also expects earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the financial year to be around $17 million.
Management commentary
Rhipe Chair, Gary Cox, said
The rhipe Board has unanimously concluded the Scheme represents an attractive outcome for our shareholders, partners and customers, and staff. In the rhipe Board's view, all cash price at a significant premium to the recent VWAP trading performance reflects the inherent value of rhipe's business operations, platform, and growth strategy throughout Asia Pacific.
rhipe's partners and customers will benefit from the broader global service capability from a combined Crayon and rhipe. In addition, Crayon's offer is positive news for rhipe's staff, as we believe there will be increased opportunities to develop new technologies and products and grow their careers.
