Up 7% today, could this ASX All Ords tech share be in for more takeover bids?

Nitro Software's strong Q3 FY22 results could give potential buyers food for thought.

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Key points

  • Nitro responded to speculation on its takeover bids by saying there is "no certainty" they will be accepted
  • However, sources say the tech share could receive a bid as early as tomorrow that will beat Potentia's original $386 million deal
  • Nitro's strong Q3 results may could give it more leverage if it finds itself at the negotiating table

The Nitro Software Ltd (ASX: NTO) share price soared today after the ASX tech share released a largely positive quarterly activities report and Q3 2022 trading update.

The ASX small-cap share also put out a statement in regard to media speculation relating to possible further takeover bids. The company rejected a takeover proposal from the Potentia Consortium on August 31.

Nitro shares ended the day trading for $1.73 apiece, an increase of 7.45%. For comparison, the All Ordinaries Index (ASX: XAO) gained 0.53%.

Takeover talk

Nitro Software could be in the running for additional takeover bids in the future, as it confirmed this afternoon it had "received expressions of interest from a number of qualified third parties".

In response to the media's speculation as to whether it would accept a deal, the ASX tech share reiterated that "there is no certainty that the engagement with any third party will result in a change-of-control transaction capable of being considered by shareholders".

However, this hasn't stopped sources from guessing whether or not Nitro will look for a better offer.

The Australian reported yesterday that Nitro could be more open to offers from potential acquirers. These include a rumoured bid that will be received tomorrow that will beat Potentia's original $386 million deal.

Nitro previously reported a takeover approach on 31 August by the Potentia consortium, consisting of Potentia Capital Management Pty Ltd and HarbourVest Partners LLC. Details of the offer included acquiring 100% of the company for $1.58 per share.

However, Nitro turned down the proposal, noting that growth stocks like itself have been severely discounted. It also noted it has a strong competitive moat with its software-as-a-service PDF productivity e-signing platform.

The latest rumours come after fellow tech share ELMO Software Ltd (ASX: ELO) on Wednesday announced the receipt of a recommendable takeover offer.

Elmo has entered into a scheme implementation deed (SID) with K1 Investment Management. The proposed scheme of arrangement would see Elmo shareholders receive $4.85 cash per share.

The buyout proposal is at a relative bargain to its previous valuations. This could suggest tech companies in this environment are still open to being bought out despite receiving what could be considered lowballed offers.

Nitro reports strong Q3 FY22 results

Potential acquirers of Nitro Software could be giving the All Ords share a second look today following the company's latest quarterly updates.

Highlights included strong reported improvements in its fundamentals. These included annual recurring revenue (ARR) growing 51% year over year and record cash receipts from customers. It also reported a strong financial position with US$29.2 million (AU$ 44.95 million) in cash on its balance sheet.

These developments could give Nitro better leverage at the negotiating table.

Nitro Software share price snapshot

The Nitro Software share price is down around 30% year to date. The All Ords, meanwhile, is down around 9% over the same period.

The company's market capitalisation is around $394.55 million.

Motley Fool contributor Matthew Farley 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 Elmo Software. The Motley Fool Australia has positions in and has recommended Elmo Software. The Motley Fool Australia has recommended Nitro Software Limited. 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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