Bravura Solutions proposed a non-binding indicative offer to acquire all the shares in ASX-listed information technology company, GBST Holdings Limited, at a consideration of $2.50 in cash per GBST share. The news sent the BVS stock to surge up by 2.667% to last trade at $5.390 on 12 April 2019.
In the announcement to Australian Securities Exchange, Bravura Solutions Limited (ASX: BVS) stated that the acquisition of GBST would be made by way of a scheme of arrangement. The cash consideration of A$2.50 per GBST share is inclusive of dividend component, if applicable.
The proposed Cash Consideration represents a premium of 36.9% to the trading day volume-weighted average price (VWAP) from the release of GBSTâs 1H19 results on 13 February 2019 to 11 April 2019 and 30.4% to the 30-trading day VWAP to 11 April 2019.
The dividend component may include up to A$0.35 per share in the form of a special dividend, payable to GBST shareholders prior to completion of the transaction to the extent GBST is legally entitled to make such a dividend and elects to do so. This would be deducted from the cash consideration.
Bravura believes that the Indicative Proposal represents an attractive opportunity for the shareholders of complementary company GBST as they will receive a certain cash payment with an attractive premium rather than remain exposed to a fluctuating share price. It would also enable GBST shareholders to avoid the uncertainty and costs associated with the significant investment to renew its software platforms, including the E-VOLVE program to bring Composer to modern standards and the changes required as part of the ASX CHESS transition to blockchain technology.
To make the offer more compelling, Bravura has also offered an alternative consideration option to GBST shareholders that includes both cash and scrip component. In such a case, if the transaction goes through, GBST shareholders would be entitled to receive A$0.35 per share cash payment less the amount of any Special Dividend payable to the GBST shareholders referred to above; and 0.4095 Bravura shares for every GBST share.
The report read that the Cash and Scrip Option is subject to a cap so that the total number of shares issued by Bravura does not exceed 16.4 million. To the extent that elections for the Cash and Scrip Option exceed the cap, shareholders will reportedly be subject to pro rata scale back and receive the Cash Consideration for the shares to which the scale back applies. Bravura further stated that shareholders who elect the Cash and Scrip Option and receive shares in Bravura could choose to remain invested in and exposed to the larger and more liquid combined business.
In order to progress the Indicative Proposal to a formal binding offer, Bravura is seeking an eight-week period to conduct due diligence.
Moreover, the Indicative Proposal is non-binding and is subject to a number of conditions including, completion of due diligence to Bravuraâs satisfaction and the required approvals.
In todayâs trading session, BVS stock price closed at a price to earnings multiple of 37.610 x with a market capitalisation of $1.13 billion.
Over the past 12 months, the stock has witnessed a positive price change of attractive 90.22% including an upside price movement of 23.24% in the past three months.
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