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.