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Bapcor (ASX:BAP) share price jumps 11% on takeover offer

The Bapcor Ltd (ASX: BAP) share price is rising after the auto parts company received a proposal.

Bapcor operates a number of auto parts businesses including Burson, Autobarn, Autopro, Midas, ABS, Shock Shop and Battery Town.

Takeover offer for Bapcor shares

After the ASX share market closed on 7 June 2024, Bapcor received an “unsolicited, indicative, conditional and non-binding” proposal from private equity outfit Bain Capital to buy all of the Bapcor shares.

The offer is $5.40 cash per Bapcor share, reduced by any dividends paid or declared after the date of the proposal.

Bapcor’s board has decided to disclose the proposal before concluding its assessment of the offer.

The offer comes with a number of conditions including:

  • Satisfactory due diligence
  • Execution of a binding takeover agreement
  • Unanimous recommendation from the Bapcor board
  • Commitment of the Bapcor board to vote in favour of the transaction (if there is no superior proposal and a positive recommendation from an independent expert)
  • Approval by the Bain Capital investment committee
  • Regulatory and statutory approvals

The Bapcor board cautioned that, at this time, there are no guarantees an indicative proposal will be put forward by Bain Capital that will result in a binding offer, or that any transaction will eventuate.

The board also said shareholders don’t need to take any action in response to this offer and that Bapcor will keep the market informed of any material developments.

Macquarie Group Ltd (ASX: MQG) has been appointed as the financial adviser and Allens has been chosen as the legal adviser.

Final thoughts on the Bapcor share price

Investors clearly like the news, with Bapcor shares up more than 11% in initial response to the offer. However, the current level of $4.86 is still significantly below the offer price of $5.40, so the market isn’t convinced the offer will proceed to a takeover at this stage. There are a lot of conditions that still need to be satisfied.

If I were a shareholder, I’d wait before selling. This is an opportunistic time to offer to buy Bapcor whilst it’s suffering during tough retail conditions, so it’s possible the business could recover by itself, or Bain may offer a firm proposal that could lead to a higher share price.

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