The Insignia Financial Ltd (ASX: IFL) share price has soared 6% after receiving a new takeover bid, from Brookfield.
Insignia is one of the largest financial advice businesses in Australia, while Brookfield is a major Canadian investment institution.
Brookfield bids for Insignia
Insignia announced to the ASX it has received a non-binding, indicative bid from Brookfield to buy the business at a price of A$4.60 cash per share, adjusted for any dividends paid. Or, owners of Insignia shares could receive shares in Brookfield’s unlisted bid business.
This bid is the same level of cash per share proposed by CC Capital Partners and Bain Capital that offered revised bids in January.
Brookfield’s bid comes with a number of conditions including satisfactory due diligence, the recommendation from the Insignia board of directors and the approval of Brookfield’s investment committee.
If Insignia were to accept Brookfield’s offer, the transaction would be subject to the Foreign Investment Review Board (FIRB) and the Australian Prudential Regulation Authority (APRA).
Insignia response
In order for Brookfield to decide on whether to provide an improved offer from this initial bid, Insignia said it would provide Brookfield with a “limited period of access to certain non-public information on a non-exclusive basis.”
Insignia noted that the provision of this limited due diligence does not guarantee the proposal will result in a binding offer or one that the ASX financial share’s board can recommend.
The company noted shareholders don’t need to take any action and that it will keep the market informed of any developments.
Final thoughts on Insignia shares
It’s not surprising the Insignia share price has jumped in response to this because I think it makes a takeover more likely and could also mean additional bids occur so that there’s a clear winner.
With the company now trading at around the bid price, the market is expecting a stronger bid than what’s currently on offer, with Brookfield indicating it may do that.
I wouldn’t necessarily invest today, with the Insignia share price already up 30% this year and it’s close to what the likely final bid price will be.
If I were a shareholder, I’d be happy to sell, but waiting to see what the improved bid could be may also appeal. I’d put the money into other ASX dividend shares.
