The Kelsian Group Ltd (ASX: KLS) share price is rocketing higher on Thursday.
In afternoon trade, the travel company formerly known as SeaLink has seen its shares shoot 15% higher to $6.29.
Why is the Kelsian share price rocketing higher?
The Kelsian share price is storming higher today after investors responded very positively to an announcement.
Last month the company confirmed that it was in talks with GoAhead Group regarding the potential acquisition of the UK-based bus and train operator.
While no financial terms were provided, Kelsian advised that any deal would likely to be in cash.
Furthermore, with LSE-listed GoAhead currently commanding a 600 million pounds (~$1 billion) market capitalisation, it would be a significant deal for Kelsian, which has a $1.4 billion market capitalisation following today's gain.
What's the latest?
Given the Kelsian share price performance today, readers might now be expecting to read that the company has signed an agreement to acquire GoAhead.
But that's not the case. In fact, the market has actually responded positively to confirmation that Kelsian will not be making an offer for GoAhead. It appears that investors were not convinced with the plan given the significant capital it would have needed to raise to make the acquisition.
Management blamed volatile equity markets for its decision to scrap the deal. It explained:
Kelsian is always considering growth opportunities and would only pursue an opportunity that is strategically and financially attractive for its shareholders, as well as aligning with Kelsian's business model and operating culture. Kelsian has a track record of successfully acquiring, integrating and growing Australian and international businesses.
Unfortunately, recent Australian equity markets have been volatile and external events have adversely impacted the Kelsian share price since 14 June 2022 when Kelsian first announced it was considering a possible offer for Go-Ahead. The Kelsian Board consider that Australian equity market conditions at this time do not enable Kelsian to pursue a possible transaction for Go-Ahead despite the long-term strategic and economic rationale of the potential transaction for Kelsian.
