Telecommunications company Huge Group has secured the backing of more than three-quarters of its shareholders for its R795-million pursuit of JSE-listed software services group Adapt IT, it said on Monday.

Huge Group, which is also a listed entity and announced its pursuit of Adapt IT last Wednesday, counts large institutional investors such as Stanlib Asset Management, Sentio Capital Management and Praesidium Capital Management among its shareholders. It said shareholders representing 79.57% of Huge shares have provided irrevocable undertakings to support the Adapt IT offer.

“The Huge board expects that further information will be contained in the ‘firm intention announcement’, which should be released as soon as reasonably possible after the date of this announcement,” Huge Group said.

Speaking to TechCentral on Monday, Huge Group CEO James Herbst said the company engaged with the Takeover Regulation Panel on Friday morning. “They were incredibly helpful. We were asked to demonstrate Huge Group shareholder support. We rallied and within 24 hours we provided the Takeover Regulation Panel with irrevocable undertakings from 79.57% of our shareholders. I think this demonstrates the speed at which we are prepared to work and can work.”

The all-share bid, at an offer price of R5.52/share, does not enjoy the explicit support of Adapt IT’s board. Though it wants to buy 100% of the company, Huge Group has said it is also prepared to accept a lesser stake – and even a minority stake. However, if all Adapt IT shareholders accept the offer, Huge Group will have to issue about 130 million new shares.

Independent board

“Based on a reference price of a Huge Group share of R6.12, Huge Group is prepared to acquire one Adapt IT share for a purchase consideration of R5.52 to be settled by the delivery of 0.9 Huge Group shares, which is commonly referred to as the swap ratio,” Huge Group said when announcing the offer last week.

Adapt IT’s board is now required, in terms of South African company law, to establish an independent board to evaluate the offer.

The R5.52/share offer represents a 33% premium to the 30-day volume-weighted average price at which Adapt IT traded before the offer was announced. The company’s share price closed at R4.40 on Friday, 25% below the offer price. — © 2021 NewsCentral Media