The Infomedia Limited (ASX: IFM) share price has returned from a trading halt and is shooting higher.
In morning trade, the automotive software company's shares are up over 30% to $1.67.
Why is the Infomedia share price shooting higher?
The catalyst for the rise in the Infomedia share price on Monday has been the receipt of a takeover approach.
As we mentioned here last week, the company requested a trading halt on Friday following the receipt of a change of control proposal. This coincided with a separate announcement that revealed that the TA Consortium had become a new substantial shareholder with a 14.5% stake.
This morning, Infomedia confirmed that the TA Consortium, which comprises Boston-based private equity firm TA Associates and Australian Viburnum Funds, is the party that has made the takeover approach.
According to the release, the consortium has made a conditional, non-binding, indicative proposal to acquire 100% of Infomedia via a scheme of arrangement for a price of $1.70 cash per share.
This represents a 32.8% premium to the Infomedia share price prior to its trading halt. Though, this offer will be reduced accordingly if any dividends are paid.
What now?
The Infomedia Board has not yet made a decision on the offer. It will now commence an assessment of the proposal to see if it is in the best interests of non-affiliated Infomedia shareholders.
It also revealed that there are other interested parties and is in preliminary discussions with them. Infomedia shareholders will no doubt be hoping this leads to a bidding war commencing in the coming days or weeks to drive the takeover price even higher.
In the meantime, Infomedia has told shareholders that they do not need to take any action in response to the proposal. It also warned that there is no certainty that the proposal nor other discussions will result in a transaction.
