Shares in AUB Group Ltd (ASX: AUB) have surged after the company confirmed it is still in talks with private equity firm EQT about a possible takeover. However, the stock is still trading well shy of the actual takeover offer price.
AUB was forced to update the market about the potential bid from Danish firm EQT late last month, after the Australian Financial Review broke the news that the two were in talks.
AUB informed the ASX at the time that discussions about a potential buyout commenced on September 13, when EQT initially offered $43 per share, which was subsequently increased to $45 per share.
The $45 potential offer was a massive 40.2% premium to AUB's previous closing price, and the stock naturally traded higher on the news.
There is no guarantee a formal bid will arise, however, and the stock has continued to trade at a discount to the offer price.
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Negotiations continuing
On Friday, AUB released an update to the ASX, saying talks with EQT were ongoing.
As the Australian company said:
Under the terms of the confidentiality agreement, EQT was required to re-confirm its intention to proceed with the proposal to acquire AUB at $45.00 cash for each AUB share to retain exclusivity. EQT has provided such re-confirmation.
AUB said it had also extended the initial four-week exclusivity period by another two weeks, to 20 November.
The AUB Board notes that there is no guarantee that a binding agreement will be reached with EQT and therefore no certainty that the proposal will result in a transaction.
AUB shares traded as high as $40.28 early on Friday before settling back to be 9.3% higher at $39.99.
Positive development
Broker E&P Capital said in a note to clients that it was a positive development.
While EQT's re-confirmation of its intention to proceed with its $45 per share proposal doesn't guarantee it will enter into a binding agreement it does suggest it has not been overly concerned by the recent de-rating of insurance broking peers offshore or Steadfast Group's recent reduction in its premium rate growth expectations for FY26.
AUB is an S&P/ASX 200 Index (ASX: XJO) company comprised of a group of retail and wholesale insurance brokers and underwriting agencies, which operates in about 580 locations globally, according to its website.
The company was founded in 1985 and now serves approximately one million clients, managing over $11 billion in insurance premiums.
EQT is based in Denmark and, in its most recent quarterly report, stated that it had approximately €267 billion ($474.3 billion) in assets under management.
