Shareholders of ASG Group Limited (ASX: ASZ) will be smiling this weekend after seeing the value of their holdings increase by a whopping 16.5% today.
The reason for the surge in the shares of this provider of information technology services was down to an announcement which revealed the company is subject to a takeover offer from Tokyo-based Nomura Research Institute.
According to the release Nomura has offered to acquire ASG for $1.63 cash per share, valuing the company at approximately $349 million. This works out to being a 20% premium to its last close price of $1.36.
ASG's Independent Board Committee has unanimously recommended that all ASG shareholders vote in favour of the offer in the absence of a superior proposal and subject to an independent expert confirming that the offer is in the best interests of shareholders.
Non-executive chairman Ian Campbell had this to say on the offer:
"Balancing all factors, including the inherent risks and volatility in commercial markets, we believe based on current circumstances outlined in this announcement that shareholders should support the Proposal and vote in favour of the Scheme."
I would have to agree with the Mr Campbell and the board on this view. I personally believe the price Nomura is proposing to pay to acquire ASG is more than fair.
According to CommSec, analysts are expecting the company to deliver earnings per share of 8.5 cents in FY 2017. The offer price of $1.63 means Nomura will pay approximately 19x forward earnings to acquire the company.
This is a significant premium to where its peers SMS Management & Technology Limited (ASX: SMX), RXP Services Ltd (ASX: RXP), Data#3 Limited (ASX: DTL), and DWS Ltd (ASX: DWS) are trading presently.
According to management shareholders will be able to vote on the takeover offer at a meeting expected to be held in mid-December. If I were a shareholder I'd certainly vote in favour of it.
