Pacific Smiles Group Ltd (ASX: PSQ) shares are having a very strong start to the week.
In morning trade, the ASX All Ords stock is up 15% to a 52-week high of $1.87.
Why is this ASX All Ords stock rocketing?
Investors have been buying the dental company's shares this morning after it received and accepted a new takeover offer.
As a reminder, Pacific Smiles has previously received bids of $1.40 per share and $1.75 per share from Genesis Capital.
According to the release, Pacific Smiles has entered into a scheme implementation deed (SID) with NDC HoldCo. It operates the National Dental Care centres and is a portfolio company managed by Crescent Capital Partners Management.
Under the terms of the deed, NDC agrees to acquire 100% of the shares in Pacific Smiles by way of scheme of arrangement for a cash consideration of $1.90 cash per share. This is subject to all applicable conditions being satisfied or waived.
The ASX All Ords stock will have the option to pay shareholders a fully franked dividend of up to a maximum of 12 cents per share before the deal completes. However, the cash consideration of the offer will be reduced by the amount of any such dividend.
Unanimously recommended
The Pacific Smiles board unanimously recommends shareholders vote in favour of the scheme at the scheme meeting. This is subject to no superior proposal emerging and the independent expert's report. All directors intend to vote in favour of the scheme under the same qualifications.
They highlight that NDC's offer represents a 59% premium to the undisturbed closing price of $1.20 per share on 15 December 2023. That was the last trading day prior to the announcement that Genesis Capital had made an offer.
Furthermore, the board notes that the offer under the scheme represents an enterprise value multiple on the mid-point of FY 2024 EBITDA guidance of ~11x and an equity value of $303 million based on its outstanding shares.
The scheme remains conditional upon a number of items, including shareholder and FIRB approval. If everything goes to plan, the ASX All Ords stock expected the scheme to be implemented in August.
However, if it doesn't then shareholders will be penalised. The release notes that if FIRB approval is delayed beyond 27 September, a ticking fee of one cent per share per month will accrue after each full calendar month until approval is obtained.
Following today's gain, this ASX All Ords stock is up 35% since this time last year.
