ANOTHER WEEK
use the group as its “African champion for future transactions driven by the Adapt IT management team”.
The terms of the Volaris offer will allow Adapt IT shareholders to retain all or part of their shareholding in an unlisted vehicle.
While this is not usually a route followed by local investors, there have been notable successes after companies delisted from the JSE — such as HomeChoice (which subsequently relisted). In addition, a listed parent company such as Constellation should offer remaining shareholders comfort in terms of good corporate governance and communication.
Constellation was founded in 1995, and in some ways resembles a larger version of Adapt IT in that it has a portfolio of verticalmarket software firms that command specific technology niches.
Since listing in Toronto, Constellation’s acquisitions and organic growth have built a customer base of more than 125,000 in more than 100 countries. The group generates revenues north of $3.8bn.
No doubt there could be merit in Adapt IT shareholders staying aboard an unlisted vehicle that can latch onto this behemoth.
Still, the Volaris offer represents a 56% premium on the closing price of Adapt IT shares before the buyout proposal was tabled. It would be hard to imagine shareholders not taking the cash and then looking for other opportunities on the JSE.
McLachlan, however, will not rule out a simpler explanation for Adapt IT’s share price being close to Volaris’s offer price — that novice investors might naively believe they are still making a profit on the buyout price.
But at the time of writing, Adapt IT shares were trading at 641c on sizable volumes.
Someone, or something, seems intent on building a position.
Perhaps there’s a simpler explanation — that novice investors might believe they are still making a profit