The IRESS Ltd (ASX: IRE) share price is storming higher on Wednesday morning.
At the time of writing, the financial technology company's shares are up 6% to a record high of $15.25.
Image source: Getty Images
Why is the IRESS share price storming higher?
Investors have been bidding the IRESS share price higher today after it confirmed the receipt of yet another improved takeover proposal from EQT Fund Management.
This follows the receipt of offers from EQT in June of $14.80 per share and in July of $15.30 to $15.50 per share.
According to the release, IRESS has received a further confidential, non-binding, and indicative proposal from EQT to acquire all of IRESS' shares at a revised implied value of $15.91 cash per share before franking credits.
This comprises a cash consideration of $15.75 plus a permitted FY 2021 interim dividend for eligible shareholders of up to $0.16 per share.
The release notes that previous proposals made by EQT assumed there would be no further dividends paid by IRESS or capital management prior to completion of any transaction.
The implied value of the new proposal represents a 45.3% premium to the undisturbed IRESS share price on 9 June. It is also a premium of 10.8% to the IRESS share price at the close of play on Tuesday.
It values IRESS at an equity value of $3.1 billion and an enterprise value of $3.2 billion. This means EQT would be acquiring IRESS for 37x its FY 2023's underlying earnings target.
Due diligence granted and potential board recommendation coming
The IRESS Board revealed that it has carefully considered the proposal. This includes obtaining advice from its financial and legal advisers.
Following this, the Board considers it in the best interests of shareholders to engage further with EQT. As a result, it has agreed to grant the suitor a period of 30 days to undertake its due diligence. It has also agreed to certain exclusivity provisions during this period.
In addition, the release notes that IRESS' Directors intend, subject to the entry into a scheme implementation deed on acceptable terms, to unanimously recommend that shareholders vote in favour of the proposal. This will be in the absence of a superior proposal and subject to an independent expert concluding that the proposed transaction is in the best interests of shareholders.
However, for the time being, it recommends that shareholders take no action in relation to the proposal. It also warned that there is no certainty that the proposal will result in an offer capable of acceptance for IRESS shareholders.
The IRESS share price is now up 42% in 2021.
