Platinum Asset Management Ltd (ASX: PTM) shares are shooting higher on Tuesday morning.
At the time of writing, the fund manager's shares are up 16% to $1.15.
Why are Platinum shares racing higher?
Investors have been scrambling to buy the company's shares this morning after it confirmed the receipt of an unsolicited confidential, non-binding, indicative proposal from Regal Partners Ltd (ASX: RPL).
According to the release, Regal Partners has offered 0.274 Regal Partners shares for each Platinum share held.
Based on where the Regal Partners share price ended yesterday's session, this equates to an offer of 90.42 cents per share.
In addition, prior to the implementation of the scheme, Platinum would be permitted to pay a fully franked special dividend to its shareholders of 24 cents per share. This would come from its own cash reserves.
This effectively brings the total offer value to $1.1442 per share, which represents a premium of 15.6% to where Platinum shares ended yesterday's session.
It is also worth noting that the consideration would be reduced by Platinum's FY 2024 4 cents per share final dividend and any other dividends paid by Platinum, other than the permitted 24 cents per share special dividend.
The release notes that the Regal Partners proposal is subject to a number of conditions. This includes the granting of due diligence, the Platinum board recommending the proposal to shareholders, and entry into a mutually acceptable scheme implementation deed.
Any scheme of arrangement would also be subject to a number of customary conditions, including shareholder, court, and regulatory approvals
What now?
The Platinum board advised that it is considering the merits of the proposal.
This includes assessing the stand-alone inherent value of Platinum in a change of control context, including with reference to Platinum's current turnaround strategy, outlook, and planned future growth initiatives.
It will also have regard to the absolute and relative value of the Regal share consideration being proposed, the potential business costs, and benefits of any combination, as well as Platinum's own capital management plans and alternative strategic options.
In the meantime, the company stressed that this development should not impact its unitholders, and its investment philosophy and process remain the same.
Platinum also warned that there is no guarantee that discussions with Regal Partners will progress or that due diligence access will be granted. As a result, shareholders should not take any action in connection with the proposal.
