ASX All Ords stock Close The Loop Ltd (ASX: CLG) bolted out of the gates at the market open on Tuesday following news of a takeover offer.
Close the Loop opened at 25.5 cents per share, up 24%, after the global recycling company announced a takeover offer at 27 cents per share. At the time of writing, shares have partially retreated to 24 cents, up 17.07% on yesterday's close.
Close the Loop collects and refurbishes products such as laptops, printers, and gaming devices. It also recycles paper and plastics and manufactures sustainable packaging.
The company announced receipt of an indicative, non-binding, and conditional proposal from Adamantem Capital to acquire the company by way of a scheme of arrangement for 27 cents per share.
This represents a 49% premium to the ASX All Ords stock's 30-day volume-weighted average price (VWAP) on 15 November.
Let's take a closer look at the details of the proposed deal.
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ASX All Ords stock rockets on takeover offer
The takeover offer allows Close the Loop shareholders a choice of cash, scrip in the Adamantem acquisition entity, or a combination of both in exchange for their shares.
The scrip election will be subject to an aggregate minimum take-up level among all shareholders.
The total scrip consideration will be scaled back if elections exceed a maximum scrip roll of 45%.
In a statement, Close the Loop said its directors had decided it was in shareholders' best interests to engage with Adamantem and allow it to undertake due diligence.
The parties have agreed to negotiate a binding Scheme Implementation Deed (SID) on an exclusive basis over 20 business days. If necessary, the exclusivity period may be extended for a further 20 business days.
Close the Loop directors said they intended to "unanimously recommend" that shareholders vote in favour of the transaction" if a SID can be agreed on acceptable terms for at least 27 cents per share.
The company said this was subject to not receiving a superior offer. It's also subject to an independent expert concluding that the deal is in the best interests of this ASX All Ords stock's investors.
The company said:
At this stage, Close the Loop shareholders do not need to take any action in relation to the Indicative Proposal from Adamantem.
The Directors note that there is no certainty that the engagement between the Company and Adamantem will result in a change of control transaction or an offer capable of acceptance by Close the Loop shareholders.
Close the Loop has appointed MA Moelis Australia as financial advisor and Thomson Geer as legal advisor on the deal.
Close the Loop share price snapshot
This ASX All Ords industrial stock has fallen by around 35% in the year to date.
By comparison, the All Ordinaries Index (ASX: XAO) has risen just under 10% over the same period.
