The share price of Durban-based technology services company Adapt IT shot up by more than 10% on Tuesday morning after it said it was in talks about a possible acquisition.

The fast-growing company, which in August reported a 55% improvement in full-year headline earnings per share on the back of strong revenue growth, told shareholders that it had “entered into negotiations in respect of a possible acquisition, which, if successfully concluded, may have a material effect on the price of the company’s securities”.

No further details of the talks were provided. However, its brief statement was enough to light a fire under its share price, which jumped to R6,70/share soon after the market opened on Tuesday. That was 10,7% higher than its closing price on Monday.

In the past 12 months, Adapt IT’s share price has risen by 59,2%. However, in the past six months it has come under pressure, falling by 36,2%.

In August, Adapt IT announced that it had grown its headline earnings per share by 55% to 34,55c in its 2014 financial year, which ended in June. That was on the back of a 34% rise in revenue to R406,3m and a 69% improvement in operating profit to R49,6m.

On the back of this strong growth, the company, which specialises in supplying IT solutions to the education, manufacturing, financial services and energy sectors, hiked its dividend per share by 48% to 8,23c.

During the 2014 financial year, Adapt IT acquired the Aquilon group of companies, which now forms part of the Adapt IT Energy division. “This acquisition has provided entry into the oil and gas industry, extending our SAP solution competence, introducing supply chain management solutions and offering Adapt IT excellent future growth potential,” said CEO Sbu Shabalala in a statement at the time.

The education sector contributed 30% of revenue, manufacturing 37%, energy 17% and financial services 16%. Twenty-five percent of revenue was from abroad, mostly from 14 other African countries. — (c) 2014 NewsCentral Media