Why is the Damstra share price soaring 26% on Thursday?

Damstra shares are rocketing higher on Thursday…

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Rocket powering up and symbolising a rising share price.

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Key points

  • Damstra shares are on fire on Thursday afternoon
  • Takeover rumours have boosted this beaten down tech share
  • Takeover talks have ended but that hasn't stopped investors scrambling to buy shares

The Damstra Holdings Ltd (ASX: DTC) share price has been an incredibly strong performer on Thursday.

In afternoon trade, the enterprise protection software provider’s shares are up 26% to 19.5 cents.

Despite this, the Damstra share price is still down 44% since the start of the year.

Why is the Damstra share price rocketing higher?

Investors have been bidding the Damstra share price higher on Thursday amid reports that the company has been a takeover target.

According to the AFR, private equity firm Accel-KKR has been talking to Damstra in relation to a potential transaction. However, the report indicates that Accel-KKR has since walked away from talks without a deal being reached.

Interestingly, this is what happened with fellow tech share ELMO Software Ltd (ASX: ELO) last month. Accel-KKR was rumoured to have been the private equity firm that made the HR technology company a $6.10 per share indicative proposal. This was over double the ELMO share price at the time. However, talks ended before a deal could be made.

Damstra response

This morning Damstra confirmed that takeover discussions had taken place with Accel-KKR, but that they have now ended.

It commented:

[Damstra] refers to recent media speculation in relation to receipt of an unsolicited confidential, non-binding and indicative proposal (Proposal) from Accel-KKR. Discussions in relation to this Proposal have concluded.

The Board of Damstra will continue to explore options to maximise shareholder value, and will update the market in accordance with its continuous disclosure obligations under ASX Listing Rule 3.1.

Time will tell if Accel-KKR returns. But some investors appear to believe it will judging by the Damstra share price performance today.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Damstra Holdings Ltd. The Motley Fool Australia has recommended Damstra Holdings Ltd. 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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