This ASX tech share just rocketed 310%! Here's why

Investors wasted no time hitting the buy button today, sending this ASX tech share rocketing.

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A little-known ASX tech share is returning some whopping gains for shareholders today.

While the All Ordinaries Index (ASX: XAO) is up a healthy 0.4% as we head into the lunch hour, this tech stock has leapt an eye-popping 310% since the opening bell.

The company in question is Limeade Inc (ASX: LME), which provides employee well-being software solutions.

Here's why investors have sent the Limeade share price through the roof on Friday.

Why did this ASX tech share just more than quadruple in value?

Investors are bidding up the Limeade share price after the company announced that United States-based WebMD Health Services – a division of WebMD Health Corp – will acquire 100% of Limeade's shares.

WebMD has agreed to an offer price of 42.5 cents per share. That represents a 325% premium to yesterday's closing price.

The offer price equates to an enterprise value for the ASX tech share of some $112 million.

The merger agreement has been unanimously approved by the Limeade board of directors.

Commenting on the takeover proposal, Henry Albrecht, Limeade CEO, said:

Limeade and WebMD Health Services creates the only truly complementary combination of culture and well-being in the market, allowing us to maximize health and well-being for all people and deliver better service, support and capabilities for our clients.

We are confident that the combination will bring together WebMD Health Services human expertise and Limeade technical innovation into a comprehensive solution that will have a positive impact on people and companies worldwide.

The merger remains subject to a number of conditions, including securing the majority of shareholder approval.

The ASX tech share noted that it has already received signed agreements supporting the merger from major shareholders representing approximately 42% of Limeade's issued capital.

Limeade shareholders do not need to take any action at this time. A shareholder meeting is planned for mid to late August.

Limeade share price snapshot

Today's surge puts the ASX tech share back well into the green in 2023, up 32% year-to-date.

That will come as welcome news to Limeade shareholders, who'd watched the stock tumble 68% in 2023 through to yesterday's close.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Limeade. 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 Scott Phillips.

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