The Smartgroup Corporation Ltd (ASX: SIQ) share price finished the day 2% higher and closed at $9.47 this afternoon.
That caps off a substantial jump this past 2 days for the administration-outsourcing company, whose share price has soared over 20% in this time.
Read on for more details.
What's up with the Smartgroup share price lately?
Smartgroup's share price has been on the move since the company announced it had received a non-binding conditional proposal to acquire all of its outstanding shares.
The offer came from a consortium of investors made up of US investment firm TPG Global LLC, pension fund Aware Super and Australian private equity firm Potential Capital.
As it stands, the $10.35 per share all cash offer represented an 11.5% premium to Smartgroup's closing price on Wednesday and a 9.8% premium to its current market price.
Smargroup's board unanimously recommended shareholders vote in favour of the proposal, which still has to make its way through due diligence and final approvals.
As such the investor group has 4 weeks handed to them by the company to conduct its due diligence.
If successfully acquired, Smartgroup would delist from the ASX and form a private entity, under the consortium's control.
What do the experts have to say?
One leading broker has weighed in on the debate and offered its insights into the deal.
Investment research and brokerage firm Morgans believes the takeover proposal represents good bang for buck to Smartgroup shareholders.
It believes the $10.35 proposal may be substantial enough to ward off any competitive bids, especially when comparing to other players in the salary packaging industry.
The broker also added that Smargroup's FY21 earnings positions the company well for growth over the coming periods.
It raised its price target on the Smartgroup share price by 24% to match the consortium's offer at $10.35.
However, in the same move, Morgans also downgraded its recommendation from add to hold.
Other brokers are weighing in too, however with differing opinions.
Smartgroup shares were cut to Neutral at Credit Suisse, and trimmed to accumulate from buy at Ord Minnett's analyst desk.
Despite the downgrade, Ord Minnett also raised its price target by 23% to $9.85 per share, stating that whilst the deal looks like it will go ahead, "given the jump in share price" it made the decision to trim its price target and rating.
There will surely be plenty more to come as more information unfolds in the coming weeks.
