An independent expert appointed by Adapt IT has recommended that shareholders reject the unsolicited all-share offer by Huge Group, saying it undervalues the software services group.

Nodus Capital, which was appointed by the independent board as an independent expert, concluded that a fair price range for Adapt IT is between R7 and R9.09/share. As a result, Nodus believes that the Huge offer is “unfair and unreasonable to Adapt IT shareholders”.

Huge Group said in January that it would pursue an acquisition of Adapt IT. The move has not enjoyed the support of Adapt IT’s management team, which is instead supporting an all-cash takeover offer from Canada’s Volaris Group. The independent board is yet to pronounce on the R6.50/share Volaris offer, but Nodus’s valuation of Adapt IT suggests it will have to improve its offer if its bid is to be successful.

“Following the independent board’s review of the Huge offer circular and after considering the independent expert opinion, with which the independent board agrees, the independent board has concluded that the Huge offer consideration is unfair and unreasonable to Adapt IT shareholders,” Adapt IT told shareholders via the JSE’s stock exchange news service.

“Accordingly, the independent board recommends that Adapt IT shareholders do not accept the Huge offer and that no action should be taken by Adapt IT shareholders in connection with the Huge offer.”

‘Committed’

Huge has offered to acquire shares in Adapt IT by issuing 0.9 ordinary shares in Huge for each Adapt IT share tendered. This is based on a reference price of R6.13 per Huge share and an implied price of R5.52 per Adapt IT share.