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Huge Group’s bid for Adapt IT dubbed ‘unfair, unreasonable’

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 17 May 2021
Huge Group CEO James Herbst and Adapt IT CEO Sbu Shabalala.
Huge Group CEO James Herbst and Adapt IT CEO Sbu Shabalala.

Adapt IT’s independent board is urging the JSE-listed company’s shareholders not to accept the Huge Group’s offer to take over the firm.

In a statement this morning, Adapt IT says shareholders are referred to the announcements dated 28 January 2021, 3 February 2021, 15 February 2021, 30 March 2021 and 16 April 2021, relating to the unsolicited firm intention by Huge Group to make a general offer to acquire up to 100% of the entire issued share capital of Adapt IT.

It notes the Huge offer circular was posted to Adapt IT shareholders on Friday, 16 April 2021.

Huge has offered to acquire shares in Adapt IT in consideration for which Huge will issue 0.9 ordinary shares in Huge (rounded up to the nearest whole number of Huge shares) for each Adapt IT share in respect of which the Huge offer is accepted.

According to Adapt IT, this swap ratio is based on a reference price of 613c per Huge share and an implied price of 552c per Adapt IT share.

Adapt IT shareholders are advised that the company's circular in response to the Huge offer circular has been prepared by the independent board of the company and has, together with the opinion of the independent expert, today been distributed to Adapt IT shareholders that were recorded as such on the shareholders’ register as at 7 May 2021.

Nodus Capital, the independent expert, has in accordance with Regulation 90 of the Companies Regulations, performed a detailed valuation of Adapt IT shares and the Huge offer consideration, and based on the results of the procedures performed and other considerations, concluded that a fair price range for Adapt IT is R7.00 to R9.09 per Adapt IT share.

Accordingly, the independent expert is of the opinion that the Huge offer consideration is unfair and unreasonable to Adapt IT shareholders, says the company.

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 the Huge offer consideration is unfair and unreasonable to Adapt IT shareholders.

“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,” the software services firm says.

The news comes days after Adapt IT CEO Sbu Shabalala took temporary leave to deal with a personal matter after assault allegations were levelled against him.

Canadian software company Volaris is also looking to buy Adapt IT.

Both Huge Group and Volaris recently launched separate attempts to take control of the software services company, and the bidding is getting aggressive and mucky.

The James Herbst-led Huge Group launched the first salvo, urging shareholders to reject the Volaris offer and consider its bid, prompting Adapt IT to hit back, cautioning investors not to be coerced into making a decision.

Adapt IT wanted shareholders to receive an independent review first before making a decision on the unsolicited bid.

However, days later, Volaris received weighty shareholder support for its Adapt IT takeover bid.

The Canadian software group obtained noteworthy support for the deal after receiving irrevocable commitment from shareholders holding 44.4% of Adapt IT shares.