Shareholders in Adapt IT, a small but fast-growing software IT company based in Durban, are partying like it’s 1999.
The stock added another 4% on Friday, valuing Adapt IT at just more than R900m and putting pressure on Huge to sweeten its all-paper bid, which was announced in December 2020 and valued its target at about R800m. It is easy to see the reasons behind Adapt IT executive leadership’s stance. Under the Huge Group’s offer, framed as an opportunity to create a larger IT software company that will take the fight to bigger players such as EOH and Dimension Data, Adapt IT investors will get 0.9 Huge shares for every Adapt IT ordinary share.
Huge denies any wrongdoing and vowed to continue with the programme but the share price is still below R6.13 per share to make the swap ratio commercially sensible for Adapt IT investors. That said, Volaris’s offer has a whiff of opportunism. Under the deal, Volaris is offering R6.50 per share, a 56.3% premium on the closing price on April 1, the day before the signing of the agreement, and valuing Adapt IT at about R1bn.
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