ASX small-cap stock SelfWealth Ltd (ASX: SWF) is making news today, surging into the green following a takeover proposal from Bell Financial Group Ltd (ASX: BFG).
At the time of writing, the stock is up 75% on the day and fetching 21 cents apiece.
The offer has caught the attention of investors, who seem keen to acquire shares in the hope that the takeover bid will be approved.
Zooming out, SelfWealth shares were down 27% this year to date up until the open on Wednesday.
Let's dive into the details behind this offer and what it means for shareholders.
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ASX small-cap stock jumps on takeover offer
Bell Financial Group has proposed to acquire 100% of the ASX small-cap stock through a scheme of arrangement.
The offer is made at 22 cents per share, valuing the company at approximately $51 million.
This is an 83% premium to SelfWealth's closing price of 12 cents per share yesterday.
Management says Bell made its first introductions on the offer back in October. Discussions have since been underway.
Bell has also provided a scrip option for SelfWealth shareholders, allowing them to take the payout in cash or Bell shares, giving investors some flexibility in realising their gains.
SelfWealth's board has responded positively to the offer, noting it is "highly attractive" and can add "significant value" for shareholders.
Subject to Selfwealth and Bell agreeing an implementation deed on terms acceptable to Selfwealth, it is the Selfwealth Board's intention to unanimously recommend that Selfwealth shareholders vote in favour of the Bell Proposal, in the absence of a superior proposal and subject to the independent expert concluding (and continuing to conclude) that the Bell Proposal is in the best interests of Selfwealth shareholders.
The company says shareholders don't need to do anything as it relates to the offer. Given there's plenty for both parties to digest, there's no guarantee it will even go ahead.
Meanwhile, the ASX small-cap stock's chair, Christine Christian, said the offer was "compelling" for shareholders.
The Board and Management of Selfwealth view the Bell Proposal as compelling for Selfwealth's shareholders, team members and clients.
It would deliver significant value to shareholders, with an attractive cash price and the potential to share in possible synergies for those electing to receive Bell shares. We also believe our clients will benefit from Bell's diversified wealth management offering
Why is this ASX small-cap stock so attractive to Bell?
Bell Financial's bid to acquire SelfWealth is part of its expanding technology & platforms business. Integrating SelfWealth customers into its own network could increase earnings. According to Bell Financial:
BFG shareholders will benefit through increased scale in BFG's online broking business and cost
synergies. The acquisition is expected to be materially earnings per share accretive post-integration, and adds almost 130,000 active portfolios, increasing BFG's sponsored holdings by $11 billion to $94 billion.
Bell Financial chair Brian Wilson expressed enthusiasm for the acquisition.
We are excited by the prospect of welcoming SelfWealth's clients and team to Bell. Clients of both businesses will benefit from a superior user experience through leveraging the respective strengths of both businesses, and access to the broader array of products and services available within BFG.
The offer remains subject to customary conditions. These include the agreement of a binding implementation deed and a unanimous recommendation from SelfWealth's board, to name a few.
Bell and SelfWealth have also entered an Exclusivity Deed, allowing Bell an exclusive negotiation period.
The ASX small-cap stock's board won't be able to entertain competing offers during this time.
Foolish takeaway
This ASX small-cap stock has exploded on Wednesday on news of a potential takeover from Bell Financial.
The premium to its last closing price is the main talking point, which could see shareholders nab quite the profit if the deal is approved. This could reverse the fortunes of shareholders who were down 25% in the 12 months to yesterday's close.
