Dragontail Systems (ASX:DTS) share price soars on Yum! Brands buyout

The Dragontail Systems (ASX: DTS) share price has soared today after a buyout offer from Pizza Hut operator, Yum! Brands.

| More on:
big fish eating smaller fish ASX shares M&A 2021

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Dragontail Systems Ltd (ASX: DTS) share price has delivered an outstanding performance for shareholders today.

At the market close, the restaurant-focused technology company's shares were up 24.3% trading at 23 cents.

Tantalising offer ignites Dragontail share price

Investors have really sunk their teeth into the Dragontail share price today after notifying the market of its entry into a scheme implementation agreement.

The agreement is with Yum! Connect Australia, which is an entity controlled by Yum! Brands Inc (NYSE: YUM). The real spicy part of the agreement is Yum! Brands will acquire 100% of the ASX-listed small-cap for $93.5 million.

Based on the agreed terms, shareholders will be entitled to receive 23.5 cents per share once all conditions are satisfied. The offer represents a 30.5% premium over Dragontail's closing price on Wednesday.

If you're unaware, Yum! Brands operates fast food brands globally – including KFC, Pizza Hut and Taco Bell. Its market capitalisation is in excess of US$35 billion, which roughly equates to the same size as five Domino's Pizza Enterprises Ltd (ASX: DMP).

Will Dominos burn Dragontail?

Dragontail being acquired might have been good for its share price, but it could make partnerships messy. The company's quality control system is used by Dominos, known as the pizza checker.

As you might know, Dominos and Pizza Hut (operated by Yum! Brands) are in competition with each other… Awkward! At this stage, it is unknown what Dominos will do now that its quality control system might be owned by a rival.

Where to next?

If the buyout is approved, the company intends to dispatch a scheme booklet to shareholders around July 2021 to vote on approving the proposal.

Dragontail shareholders must be pleased with their investment over the past year. Accounting for today's gain, the Dragontail share price has returned 109% in the last year. Far exceeding the 23% from the S&P/ASX 200 Index (ASX: XJO).

Should you invest $1,000 in Goodman Group right now?

Before you buy Goodman Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Goodman Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions

Miner looking at a tablet.
Mergers & Acquisitions

Gold Road shares surge 10% on $3.7 billion takeover offer

The ASX 200 gold stock is soaring after finding itself in the acquisition crosshairs.

Read more »

A corporate team or board stands together and looks out the window.
Technology Shares

WiseTech shares charge higher on $3.5b acquisition news

This tech stock is ending the week positively. But why?

Read more »

Two CEOs shaking hands on a deal.
Financial Shares

This ASX 300 stock is jumping on surprise merger news

This stock could be having a very big makeover.

Read more »

A graphic showing three hands holding red paddles with the word BID, indicating a bidding war for an ASX share company
Mergers & Acquisitions

Guess which ASX All Ords stock just received a new takeover offer

Let's see which stock is in the crosshairs of a rival.

Read more »

Man with rocket wings which have flames coming out of them.
Technology Shares

Guess which ASX All Ords stock is rocketing 34% on takeover deal

This stock looks set to leave the ASX boards in the near future after accepting a takeover deal.

Read more »

Two miners standing together.
Gold

Northern Star Resources set to buyout rival De Grey mining

As gold soars, ASX miners continue to mine the acquisition pipeline.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 15% on big takeover offer

Not every share is being dragged lower on Monday.

Read more »

Happy woman holding white house model in hand and pointing to it with a pen.
Mergers & Acquisitions

Up 70% this year, Domain share price wobbles on CoStar takeover update

Domain released an update on CoStar’s $2.8 billion takeover bid.

Read more »