Guess which ASX small-cap share is rocketing 24% after rejecting a takeover offer

This online beauty retailer is in the sights of a UK rival.

| More on:
A girl wearing a homemade rocket launches through the stars.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Adore Beauty Group Ltd (ASX: ABY) shares are starting the week in a very positive fashion.

In morning trade, the small-cap ASX share is up 24% to $1.16.

Why is this small-cap ASX share rocketing?

Investors have been scrambling to buy the online beauty retailer's shares this morning after it confirmed the receipt of a takeover offer.

According to the release, the company has received a non-binding, conditional, and indicative proposal from THG plc (LSE: THG) to acquire 100% of Adore Beauty's outstanding shares.

London-listed THG, also known as The Hut Group, is a British e-commerce company that sells own-brand and third-party cosmetics, dietary supplements, and luxury goods online.

The release reveals that THG's proposal is to acquire Adore Beauty by way of a scheme of arrangement for $1.25 to $1.30 cash per share, subject to various conditions including due diligence.

This offer price represents a 33.7% to 39% premium to where the small-cap ASX share ended last week.

However, it hasn't been enough to get a deal over the line.

Takeover offer rejected

The release reveals that the Adore Beauty board has rejected the offer on the belief that it undervalues the company. It explains:

Following a review of the terms of the Proposal with the assistance of its financial and legal advisers, the Board of Adore Beauty (Board) concluded that the Proposal undervalued the Company, was unable to be implemented, and was not in the best interests of shareholders. For these reasons, the Board rejected the Proposal.

It then adds:

The Board is focused on maximising value for all shareholders. The Company will keep shareholders informed in accordance with its continuous disclosure obligations.

Adore Beauty listed on the ASX in 2020 with an IPO price of $6.75.

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 recommended Adore Beauty Group. The Motley Fool Australia has recommended Adore Beauty Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Small Cap Shares

A young woman makes an online travel booking as she sits on some steps with her suitcase next to her.
Opinions

I think this ASX small-cap share can soar in 2024

This stock could keep travelling higher over time.

Read more »

Three young people in business attire sit around a desk and discuss.
Opinions

3 reasons why I'd buy small-cap shares over ASX blue chips in 2024

I’m excited by the potential of small stocks.

Read more »

three children wearing superhero costumes, complete with masks, pose with hands on hips wearing capes and sneakers on a running track.
Small Cap Shares

3 'attractive' small-cap ASX shares ready to rocket in 2024

They ended 2023 with a bang, but the gurus at IML reckon the smaller ASX businesses have more catching up…

Read more »

A couple stares at the tv in shock, one holding the remote up ready to press.
Small Cap Shares

Why Bell Potter says these ASX small cap shares are buys

The broker has only good things to say about these stocks.

Read more »

Two kids in superhero capes.
Small Cap Shares

'Substantial returns over years ahead': 2 ASX small caps starting 2024 with a bang

Smaller companies have struggled over the past two years compared to their larger rivals, but this year could see the…

Read more »

The Two little girls smiling upside down on a bed.
Small Cap Shares

2 small-cap ASX shares licking their lips over interest rate cuts

Celeste Funds names a pair of finance stocks that could be in for a winning 2024 as consumer and business…

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Small Cap Shares

2 small cap ASX shares to buy for 20% to 50% returns

Bell Potter is tipping these small caps to rise strongly from current levels.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Small Cap Shares

Morgans names 7 small-cap ASX shares to buy for earnings season

Here are a number of small caps that the broker has given the thumbs up to this week.

Read more »