Huge Group 'out of the running' in bid to buy 100% of Adapt IT
The Huge Group is likely out of the running in its bid to buy 100% of Adapt IT, after an independent board recommended that Adapt IT‘s shareholders do not accept the Huge offer.
And Huge Group said it will not increase its offer.
In a JSE Sens statement on Monday, the report from the independent board headed by investment bank Nodus described Huge Group‘s offer as “unfair and unreasonable” and that the offer was “materially below a fair price range” for Adapt IT‘s shares.
The circular said a fair price range for Adapt IT is R7-R9.09 a share.
In January Huge‘s unsolicited offer to shareholders was R5.62 a share. Another bidder, Canadian technology firm Volaris, offered R6.50 per Adapt IT share in April.
James Herbst, CEO of Huge, said: “In terms of the takeover regulations, we remain committed to the offer we have made. We are not permitted to withdraw the offer.”
He added that the fair price range as communicated by the circular will mean that “Volaris will have to up its offer”.
“We saw value in Adapt IT before anyone else. We can be pleased on that point,” he said.
Jon Tullett, research manager of IT services for the Independent Data Corporation in Sub-Saharan Africa, said either Adapt IT rejects Volaris's offer on the same grounds as Huge and stays independent until the share price drops again and investors force the board back to the negotiating table in a weaker position or Volaris ups its offer to a price shareholders would accept, he said.
“The other option is that Volaris and Huge get into a bidding war and push the price up above whatever either wanted to pay in the first place,” said Tullett.
But Herbst said: “We do not intend to alter our offer.”
The Sens statement comes in the wake of controversy surrounding Adapt IT's founder and CEO Sbu Shabalala who is on a three-month leave of absence.
This follows allegations by Shabalala’s estranged wife Neo that he allegedly facilitated an assault on her boyfriend, suspended Ethekwini city manager Sipho Nzuza, on May 1.
Volaris did not respond to a request for comment.