Canada’s Volaris has raised its cash offer to buy South African software services company Adapt IT Holdings Ltd, days after Johannesburg-listed Huge Group Ltd revised its all-stock proposal.
Volaris had initially made an all-cash offer to acquire Adapt IT for ZAR6.50 per share, translating into a deal worth ZAR942 million (around $65 million). It has now offered to pay ZAR7 per share, valuing the firm at $70 million.
This is the lower level of the ZAR7-9.09 a share fair-value range determined by an independent expert earlier.
However, this may not be enough to seal the transaction as the revised offer by Huge Group is higher.
Huge Group, which was created via consolidation between telecom companies TelePassport (Proprietary) Ltd and Centracell (Proprietary) Ltd in 2007, has offered a revised share-swap ratio of 1.37 of its own shares for each Adapt IT share tendered. It had previously offered a swap ratio of 0.9:1 earlier this year.
If Adapt IT’s board and shareholders accept Huge Group’s offer the total purchase consideration would be ZAR1.04 billion ($76.2 million) as against the original proposal of $55 million.
The independent expert had put a fair-value range of an Adapt IT Share to be between 1.05 and 1.61 Huge Group shares for one Adapt IT Share.
Adapt IT shareholders need to choose between an all-cash offer and a higher all-stock offer. Both offers are in the fair price range as determined by the independent expert.
If they opt for the stock swap, Adapt IT shareholders will own around 53% of the combined group.
Adapt IT shareholders collectively holding a 21.6% stake had previously already agreed to Volaris’s original offer.
Adapt IT provides specialist proprietary software and value-added services such as data analytics to the telecom industry via mobile networks. It serves more than 10,000 global customers. Its headquarters are in Johannesburg, and it has regional offices in Durban and Cape Town. The company also has a presence in Mauritius, Botswana, Kenya, Nigeria, Australia, New Zealand, Singapore and Ireland.
Huge Group was created in 2007. The JSE-listed company is also eyeing a secondary listing on London’s junior exchange AIM. It is eyeing Adapt IT as it continues to evolve into a diversified investment holdings group.
The group currently comprises telecommunications service providers Huge Connect Proprietary Ltd, Huge Networks Proprietary Ltd and Huge Telecom Proprietary Ltd.
Volaris specialises in acquiring vertical market software companies and is an operating group of Toronto-listed Constellation Software Inc, which has a market value in excess of $25 billion.
Constellation Software, founded in 1995, has expanded through a combination of acquisitions and organic growth. It has established a group of companies with a base of over 125,000 customers operating in over 100 countries.