Here’s why the Cashrewards (ASX:CRW) share price is surging 15% on Friday

Cashrewards’ time on the ASX may be short-lived…

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The Cashrewards Ltd (ASX: CRW) share price is taking off today after the company announced it has entered into a takeover agreement.

Under the agreement, all Cashrewards shares not already owned by a venture arm of Australia New Zealand Banking Group Ltd (ASX: ANZ) will be bought by the entity for $1.135 per share.

At the time of writing, the Cashrewards share price is $1.09, 15.26% higher than its previous close.

Let’s take a closer look at the proposed takeover of the cashback reward program operator.

Cashrewards ripe for the takeover

The Cashrewards share price is surging on news the company is set to be bought by an entity managed by 1835i Group Pty Ltd at a price that values it at approximately $89.5 million. 1835i is ANZ’s external innovation and venture capital partner.

The Cashrewards board committee has voted in favour of the entity’s all-cash offer of $1.135 per share.

The offer represents a 19.5% premium on Cashrewards’ closing price yesterday and a 30.2% premium on its 30-day volume weighted average price.

The takeover is subject to 90% shareholder approval, as well as other conditions.

1835i already holds 19% of Cashrewards’ issued shares after they were transferred from ANZ’s holdings last week.

ANZ secured the 19% holding in Cashrewards’ initial public offering (IPO), which occurred in December 2020. The bank later teamed up with Cashrewards to create Cashrewards Max.

Additionally, 2 of the company’s largest shareholders, together holding 39.4% of its outstanding shares, intend to vote in favour of the takeover.

If successful, the takeover will see Cashrewards operating independently while continuing its commercial partnership with ANZ.  

1835i has also agreed to lend Cashrewards up to $15 million for a term of 6 months from today. The funds will go towards Cashrewards’ member liability payment obligations. The loan is subject to several conditions, including that both parties continue moving forward with the takeover.

Cashrewards share price snapshot

Cashrewards’ first year on the ASX hasn’t gone smoothly. The company’s share price has fallen 36.7% since it debuted with an offer price of $1.73 per share.

However, including today’s gains, it has moved 25% higher since the start of October.

At its previous closing price of 95 cents, the company has a market capitalisation of around $74.8 million.

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Motley Fool contributor Brooke Cooper 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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