The Volpara Health Technologies Ltd (ASX: VHT) share price is in focus after agreeing to a takeover.
Volpara is a healthcare software business that provides breast screening analysis technology.
Takeover agreed
Volpara has entered into a takeover deal with Lunit Inc to buy 100% of Volpara for a price of A$1.15 cash per share.
This offer represents a 47% premium to the closing Volpara share price of A$0.78 on 13 December 2023, which is a big premium.
It implies an enterprise value of A$285.5 million, with an enterprise value to FY24 revenue multiple of 7.5x.
After looking at a number of different strategic options, the board decided the offer was the most compelling value for shareholders, in the absence of a superior proposal.
Volpara said the transaction is expected to accelerate its ability to serve its purpose of saving families from cancer. It also said its database of more than 100 million images will be “strategically augmented” by additional AI expertise and solutions.
The transaction also “positions Volpara to explore new opportunities in global markets and provides a broader portfolio of products to sell in Volpara’s largest market, the US.”
Is it a done deal?
Not yet, the proposed offer is subject to Volpara shareholder approval, Court approval, New Zealand Overseas Investment Office approval and other conditions.
However, it seems quite likely to go ahead at the moment because Harbour Asset Management, non-executive director Roger Allen and Volpara founder Ralph Highnam who together control a total of 25.92% of Volpara shares have said to Lunit they’ll vote in favour of the takeover.
Management commentary
The Volpara Chairman Paul Reid said:
Volpara’s board has assessed the proposed scheme as providing compelling, risk-adjusted value and certainty for shareholders and unanimously support the proposed transaction.
In considering options for Volpara, including continuing to implement the company’s growth strategy as a publicly listed company, the board adopted a long-term view of the risks and rewards of various alternatives. The proposed transaction would accelerate the return of capital to shareholders and mitigate the risks that would otherwise be involved in delivering the opportunities from executing Volpara’s strategic plan over time.
Final thoughts on the Volpara share price
This seems like a compelling offer for Volpara shareholders, it’s a large premium. However, it’ll be a shame to lose Volpara off the ASX boards because it seems like one of the most promising ASX small cap shares around. Is the premium enough, at a time when the company is just hitting cash flow profitability? In 12 months, the business could arguably have delivered that return itself. But, if investors accept the offer then we’ll never know.
It’ll be interesting to see what happens with the deal.
