Capral Limited (ASX: CAA) shares are rocketing higher in early trade after the company confirmed it has received a non-binding, indicative proposal from a private equity firm. At the time of writing, the Capral share price is trading 20.52% higher at $7.40.
Let's take a closer look at the Aussie aluminium products manufacturer's news.
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Why is the Capral share price surging today?
In a pre-market update, Capral confirmed an approach from Allegro Funds Pty Ltd (Allegro) to acquire 100% of its shares. Allegro is proposing to pay $7.00 cash per share, which represents a significant premium to yesterday's closing price of $6.14.
According to today's release, the Allegro offer would be a 16.5% premium to the 1-day volume-weighted average price (VWAP) of $6.01 on 13 April 2021. It also represents a 17.6% premium to the adjusted 6-month VWAP of $5.95 on 13 April 2021.
That means shareholders will be keeping a close eye on the proposed takeover developments. The Capral share price has rocketed higher on the news, particularly given the board's comments today.
The board believes the proposal "has the potential to provide shareholders with a liquidity event and the opportunity to realise a meaningful premium to the recent market value of their shares".
It's worth noting that the proposal remains non-binding and subject to several conditions. These include satisfactory completion of due diligence by Allegro, Allegro securing appropriate debt finance and both parties entering a binding scheme implementation.
However, the Capral share price has surged higher today in anticipation. The board has concluded that it is in the best interests of shareholders for Allegro to proceed with due diligence. That means the board will be engaging further with Allegro to progress this proposal.
Foolish takeaway
The Capral share price has leapt more than 20% higher at the open following the potential takeover news. The $7.00 per share cash offer represents a significant premium to yesterday's closing price and would provide certainty to shareholders compared to a scrip consideration deal.
