Seek Ltd (ASX: SEK) shares are pushing higher on Monday morning.
At the time of writing, the job listings giant's shares are up 2% to $25.49.
This compares favourably to a 0.25% gain by the ASX 200 index.
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Why is this ASX stock pushing higher?
Investors have been buying Seek's shares today after it announced plans to potentially acquire fellow listed company Xref Ltd (ASX: XF1).
According to the release, the two parties have entered into an exclusivity deed following the submission of a non-binding indicative proposal that would see the job listings company acquire Xref for 21.8 cents per share in cash by way of a scheme of arrangement.
This represents a 61% premium to where the ASX stock last traded and implies an enterprise value of approximately $45 million.
Xref is an Australia based human resources and recruitment technology company that offers a range of reference and pre-employment checks, employee engagement, and exit surveys.
The two ASX stocks announced a partnership in June to explore opportunities to collaborate and improve the way reference checks are used in employment. It seems that this partnership has gone well and Seek now wants to bring its business in house.
Management notes that the proposed transaction is consistent with Seek's strategy and focus on trust in its employment marketplace. It feels that Xref's capability is a logical extension of Seek's product offering and addresses a clear need for its customers.
Intention to recommend
In a separate announcement, Xref revealed that after careful consideration of the proposal, the company's board unanimously determined that it is in the best interests of shareholders to progress the indicative proposal.
The directors of the ASX stock intend to unanimously recommend shareholders vote in favour of the proposed transaction. This is subject to the parties entering into a binding scheme implementation deed on terms consistent with the indicative proposal and following completion of Seek's confirmatory due diligence.
The intended recommendation will be subject to no superior offer being received and an independent expert concluding that it is in the best interests of Xref shareholders.
Both Seek and Xref note that the discussions remain incomplete, and there is no certainty that any transaction will eventuate. As a result, shareholders do not need to take any action in relation to the indicative proposal at this time.
This hasn't stopped Xref shares from taking off this morning. At the time of writing, the ASX stock is up 55% to 21 cents.
