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Highlights:
- Close the Loop (ASX:CLG) shares soar 24% after receiving a takeover offer at 27 cents per share.
- The offer represents a 49% premium over the stock's 30-day average price.
- Shareholders will have the option for cash, scrip, or a combination in exchange for their shares.
Close the Loop Ltd (ASX:CLG), a global leader in recycling and sustainable packaging, is seeing a strong rally in its stock price following news of a takeover offer. Shares in the company surged 24% at market open on Tuesday, jumping to 25.5 cents per share, before partially retracing to 24 cents at the time of writing, up 17.07% from the previous day’s close.
The surge follows an announcement from Close the Loop that it has received a non-binding, indicative proposal from Adamantem Capital to acquire the company through a scheme of arrangement. Adamantem has offered 27 cents per share, which represents a 49% premium to the stock’s 30-day volume-weighted average price (VWAP) as of 15 November.
The proposed offer gives Close the Loop shareholders several options for their shares, including cash, scrip in the acquisition entity, or a combination of both. However, the scrip option will be subject to an aggregate minimum take-up level among all shareholders. If the number of scrip elections exceeds a 45% maximum threshold, the total scrip consideration will be scaled back.
In an official statement, Close the Loop confirmed that its board has decided it is in the shareholders' best interest to engage with Adamantem Capital and allow the firm to undertake due diligence. The two parties have agreed to negotiate a Scheme Implementation Deed (SID) on an exclusive basis, with a 20-business-day period to reach an agreement. This exclusivity period may be extended by another 20 business days if necessary.
Should the parties reach an acceptable agreement on the terms of the deal, Close the Loop’s directors have expressed their intention to unanimously recommend that shareholders vote in favor of the transaction. However, this recommendation is contingent on the deal being valued at at least 27 cents per share, and no superior offers arising during the due diligence process. Additionally, the deal will only proceed if an independent expert concludes that it is in the best interests of Close the Loop’s shareholders.
At this stage, Close the Loop has made it clear that no immediate action is required from its shareholders regarding the indicative proposal. The company cautioned that there is no certainty that the engagement with Adamantem Capital will lead to a formal change of control or an offer that shareholders can accept.
To assist in the process, Close the Loop has appointed MA Moelis Australia as its financial advisor and Thomson Geer as its legal advisor for the takeover discussions. These appointments underscore the seriousness of the engagement with Adamantem Capital and the focus on securing the best deal for Close the Loop’s investors.
As the takeover proposal plays out, Close the Loop Ltd will continue to engage with Adamantem Capital while also keeping its shareholders informed. The strong market reaction to the initial news is a positive signal, as it reflects investor confidence that the company could soon be part of a larger, potentially more capitalized organization.
While the deal is not yet finalized, the 49% premium offered by Adamantem Capital represents a significant opportunity for Close the Loop’s investors. If the deal progresses as planned, it could mark a transformative moment for the company, which has made significant strides in the recycling and sustainability sectors.
