The Insignia Financial Ltd (ASX: IFL) share price is having a tough session on Wednesday.
In morning trade, the ASX 200 stock is down almost 15% to $3.41.
Image source: Getty Images
Why is this ASX 200 stock crashing?
As many readers will be aware, Insignia Financial has been the subject of a bidding war recently with two private equity firms making takeover proposals.
Unfortunately, one of its bidders has decided to pull out after a period of due diligence. This has not only ended the bidding war but sparked fears that the other suitor could also see something it doesn't like and end its own interest.
According to the release, Bain Capital has informed the ASX 200 stock that it will be unable to proceed at this time with making a binding offer for the company. It notes that this is "due to the macro uncertainty caused by the volatility in global capital markets."
Bain Capital was offering $5.00 cash per share to acquire the financial services company.
And while CC Capital Partners still has a $5.00 per share offer on the table for Insignia Financial, the fact that due diligence is taking so long to complete is somewhat worrying for shareholders.
Last month on 17 April, the exclusivity period was extended by four weeks. This is due to end tomorrow on 15 May.
Nevertheless, Insignia Financial appears hopeful that CC Capital Partners will still make a binding offer. In today's release, it stated:
Insignia Financial remains in discussions with CC Capital Partners, which has advised that it continues to actively work towards making a binding bid for the company over the coming weeks. There is no certainty that the ongoing discussions will result in any transaction being put to Insignia Financial shareholders for their consideration.
The ASX 200 stock Insignia Financial advised that it will continue to keep the market informed in accordance with its continuous disclosure obligations.
Will a deal happen?
The market appears to be pricing in almost zero probability of a deal being reached between Insignia Financial and CC Capital Partners.
With its shares trading a $3.41 at the time of writing, the non-binding proposal of $5.00 per share represents a premium of almost 47%.
Time will tell if that is the case, but the signs are not looking positive.
