ResApp share price frozen as $180m Pfizer takeover bid hangs in the balance

The value of Pfizer's takeover bid may soon come to light.

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a medical person in full protective clothing holds a tray of Covid-19 vaccinations amid a haze caused by cold and ice.

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Key points

  • The ResApp share price is frozen at 17.5 cents ahead of the release of results from the company's COVID-19 data confirmation study
  • If the results are satisfactory, Pfizer will offer ResApp shareholders 20.7 cents per share
  • However, if the outcome doesn't impress the healthcare giant, it will offer 14.6 cents per share to takeover the ASX company

The ResApp Health Ltd (ASX: RAP) share price has been put in the freezer as the company prepares to announce significantly consequential study results.

The healthcare technology company is currently the subject of a $180 million takeover proposed by Pfizer Inc (NYSE: PFE)'s Australian arm.

However, if its COVID-19 data confirmation study's results are deemed unsatisfactory, Pfizer's bid will drop to $127 million.

Right now, ResApp shares are halted at their previous closing price of 17.5 cents each.

Let's take a closer look at what's going on with ResApp on Monday.

The ResApp share price is in the freezer on Monday

The ResApp share price has been halted on Monday as the market awaits results from a clinical validation study.

The study will determine if the company's technology can detect COVID-19 by analysing audio of a patient's cough as accurately as previous studies have found.

A previous pilot study found the technology – dubbed COVID Algorithm – performs with 92% sensitivity and 80% specificity.

Pfizer will offer ResApp shareholders 20.7 cents for each share they hold if the soon-to-drop results find the COVID Algorithm performs with a sensitivity of at least 86% and specificity of at least 71%.

Pfizer has also ordered the results be confirmed by an independent statistician.

If the study fails to meet the above criteria, Pfizer will offer shareholders just 14.6 cents per share.

The 20.7 cent per share bid represents a 130% premium on ResApp's close as of 8 April. The 14.6 cent per share bid represents a premium of 62.2% on the same close.

The ResApp share price is expected to remain frozen until the results' release or Wednesday's open, whichever comes first.

The company noted it's expecting to return to trade on the announcement of the results.

The ResApp share price has gained 169% over 2022 so far. It's also 280% higher than it was this time last year.

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 Scott Phillips.

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