Why the Rhipe (ASX:RHP) share price is surging 21% higher today

Another ASX company has received a takeover approach…

rising asx share price represented by happy woman dancing excitedly

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 Rhipe Ltd (ASX: RHP) share price has returned from its trading halt with a bang this morning.

At the time of writing, the leading cloud and technology solutions provider's shares are up a sizeable 21% to a 52-week high of $2.53.

Why is the Rhipe share price rocketing higher?

Investors have been scrambling to buy the company's shares this morning after it confirmed that it has received a takeover approach.

According to the release, Rhipe has received a confidential, non-binding, conditional proposal from Norway-based Crayon Group to acquire 100% of the shares in Rhipe by way of a scheme of arrangement for $2.50 per share. This represents a 19.6% premium to its last close price.

It is worth noting also that Crayon's offer will be reduced by any dividends or distributions declared by Rhipe after the date of the proposal.

What are the terms?

The release notes that Crayon's proposal assumes a net cash position of Rhipe at closing of at least $31 million.

It also advised that the proposal states that any final, binding offer would be subject to a number of conditions. This includes the satisfactory completion of confirmatory due diligence and negotiation of a scheme implementation deed, unanimous and continuing recommendation of the Rhipe Board, and no material adverse changes occurring in relation to Rhipe.

There are also customary conditions including Rhipe shareholder approval, FIRB approval, and other requisite regulatory approvals.

What now?

Following a detailed consideration of the proposal, after consultation with its appointed advisors, the Rhipe Board has decided to allow Crayon to undertake limited confirmatory due diligence on a non-exclusive basis. This is being done to enable Crayon to present the Rhipe Board with a satisfactory binding proposal.

However, the company has warned that there is no certainty that Crayon will submit a satisfactory binding proposal. As a result, it has advised Rhipe shareholders to take no action at this time.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Share Gainers

Why Capricorn Metals, Insignia, Perseus Mining, and Qoria shares are storming higher

These shares are having a strong session on Tuesday. But why?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why Amaero, AMP, Block, and South32 shares are racing higher today

These shares are starting the week on a positive note. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was another momentous session for ASX shares this Friday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why BHP, Catalyst Metals, Mesoblast, and Pilbara Minerals shares are shooting higher

These shares are ending the week with a bang. But why?

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

The Mesoblast share price just rocketed 38%! Here's why

ASX investors just sent the Mesoblast share price up 38%. But why?

Read more »