The Uniti Group Ltd (ASX: UWL) share price is lower in morning trading on Wednesday and is now $3.885, a fall of 3.12%.
Prior to the session, Uniti shares closed the day higher on Tuesday following speculation the telecommunications company is set to be acquired by asset manager HRL Morrison & Co in a $3 billion sale.
The company confirmed its position in an announcement yesterday. Although it also mentioned talks are in the early stages and nothing concrete has been established as yet.
Here's what you need to know
The discussions surrounding the $4.50 per share offer are "highly conditional, and uncertain as to an outcome", Uniti remarked yesterday.
At the time of the offer, it represented a 43% premium to Uniti's closing price on Monday and values the company at $3.06. billion.
That level is actually an almost 30% decline since trading recommenced on January 4, particularly as tech stocks across the board have sunk to new lows.
Plus, stripping out cash on its balance sheet and including debt, Uniti has an enterprise value (EV) of $2.9 billion and a market capitalisation of $2.7 billion.
As speculation mounted, however, traders boosted the Uniti share price almost 30% before the company's shares were placed in a trading halt.
Uniti said that shareholders needn't take any action as the project, titled 'Project Oatmeal', is the subject of exclusive talks with Morrison & Co. until April 22.
It is also is still subject to a number of terms and conditions, namely due diligence, unanimous board support, and then building a formal agreement.
Analysts at Ord Minnet raised their price target by around 4% to $4.05 in response to the news, noting there will be more upside if another bidder enters the ring.
Bloomberg Intelligence reports that the broker has reduced its rating to hold from a buy in the process, however.
Macquarie also chimed in and noted they remain neutral on the stock at a $3.70 price target. Hence, Morrison & Co.'s offer represents a substantial premium to this number.
In fact, the offer is well above the consensus price target of $4.12 per share on Uniti, according to Bloomberg Intelligence.
Uniti share price snapshot
In the past 12 months, the Uniti share price has soared more than 66% but it is down more than 11% this year to date in line with the performance of the broad tech sector.
Over the past month, shares are back in the green following this most recent surge which has seen shares climb 30% in the past 5 days of trading.
