The Youfoodz Holdings Ltd (ASX: YFZ) share price is rocketing higher in morning trade.
At the time of writing, the ready-made meals company's shares are up a whopping 80% to 92 cents.
Image source: Getty Images
Why is the Youfoodz share price rocketing higher?
Investors have been bidding the Youfoodz share price higher this morning after it revealed that it has entered into a scheme implementation deed with meal kit delivery company HelloFresh.
According to the release, this scheme will see HelloFresh acquire 100% of the share capital in Youfoodz for 93 cents per share in cash by way of a scheme of arrangement. This represents a premium of 82% to the Youfoodz share price at yesterday's close. It is also a 109% premium to the one-month volume weighted average price (VWAP) of 44 cents.
Based on the offer price, this values Youfoods at $125 million, which is down materially from its December IPO valuation of $201.9 million.
The Youfoodz Board unanimously recommends that shareholders vote in favour of the scheme. This is in the absence of a superior proposal and subject to the independent expert's report. RGT Capital, a holder of 57.4% of Youfoodz shares, intends to vote in favour of the scheme under those same conditions.
Is this a good deal?
While the Nuix Ltd (ASX: NXL) IPO is likely to take the biscuit for the worst IPO of the last 12 months, the Youfoodz IPO could be a close second.
Today's takeover approach may come at a significant premium to its last close price but is a massive 38% discount to its IPO listing price from just seven months ago.
This means that anyone that invested $10,000 in the Youfoodz IPO in December will see the value of their investment realised at $6,200 if the takeover completes successfully.
The scheme remains subject to customary conditions. These include Youfoodz shareholder approval, Federal Court of Australia approval, and no material adverse change or prescribed occurrences.
