The ReadyTech Holdings Ltd (ASX: RDY) share price is rocketing higher on Tuesday morning.
At the time of writing, the enterprise software company's shares are up 32% to $4.28.
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Why is the ReadyTech share price rocketing higher?
Investors have been scrambling to buy ReadyTech's shares after it became the latest tech company to receive a takeover offer.
According to an announcement, the company has received a conditional, non-binding indicative proposal from funds managed or advised by Pacific Equity Partners (PEP) to acquire it by way of a scheme of arrangement at an offer price of $4.50 per share.
This represents a 38.9% premium to the ReadyTech share price at the close of play on Monday.
The release notes that the Australian private equity firm's proposal is subject to a number of conditions. These include completion of satisfactory due diligence, negotiation and execution of transaction documentation, obtaining binding commitments from debt financiers, final investment committee approval, certain regulatory and other approvals, and other customary conditions precedent.
ReadyTech also revealed that its major shareholder, Pemba Capital Partners, will work together with PEP on the proposal. However, it stressed that Pemba, which currently holds 32.01% of the company's issued share capital, has no prior agreement, arrangement, or understanding in relation to the proposal.
What's next?
The company established an Independent Board Committee and has carefully considered the proposal. And, with the benefit of advice from its financial and legal advisers, it has granted PEP non-exclusive access to non-public due diligence information to allow it to develop a more certain proposal.
For now, discussions are ongoing and no agreement has been reached between the parties in relation to the value, structure or terms of any transaction. Management also warned that there is no certainty that these discussions will result in a transaction.
As a result, it has stated that shareholders do not need to take any action in relation to the proposal.
