This morning, Trade Me Group Ltd’s share price rose by 17.84%.
Trade Me is New Zealand’s local online trading platform — listing products from your old bicycle to luxury island resorts. Trade Me currently has a stock value of $6.01. It has a market capitalisation of $2.36 billion.
Why the sharp increase for Trade Me?
Today, Trade Me received a $2.5 billion takeover offer.
British private-equity firm Apax Partners made a proposal of $6.40 per share.
In the last few years, the firm has purchased software companies such as ThoughtWorks, Boats Group, Exact, and Evry.
Trade Me has reportedly ‘reviewed the indicative proposal’ and has decided to ‘engage with Apax’.
What’s next for [NZX:TME] shares?
This is the highest the price has been for Trade Me since parent company Fairfax first listed it in December 2011. The buzz regarding the Apax offer has obviously generated a fair bit of excitement.
There is good reason for this. Of all the software companies purchased by Apax, only Norwegian company Evry was publicly listed — on the Oslo Stock Exchange. And following that acquisition in 2015, Apax delisted Evry.
This means that if the Apax’s intended purchase of Trade Me goes through, it could mean the end of a publicly-listed Trade Me altogether. In the meantime, there isn’t much more room for a rise, given the history of Trade Me’s share price.
The current agreement between gives Apax until December 12 to ‘facilitate a binding offer’.
However, it must be noted that there is no binding arrangement to sell or even make a final offer yet. We anticipate the market to remain in a holding pattern as investors await an outcome.
Editor, Money Morning NZ