The Domino’s Pizza Enterprises Ltd (ASX: DMP) share price soared before a trading halt on news of a potential takeover.
The pizza business has locations in numerous markets such as Australia, New Zealand, Singapore, Malaysia, Cambodia, Taiwan, Japan, France, Luxembourg, Belgium, the Netherlands and Germany.
Takeover?
Domino’s shares saw a pause in trading at 11:22am today following a spike in the Domino’s share price.
When it was paused, it was 17% higher than it had been at the start of the day and had jumped 20% from the price it had been trading at minutes before.
According to reporting by the Australian Financial Review, private equity group Bain Capital is considering a takeover of Domino’s in a deal worth up to $4 billion.
The AFR highlighted that Bain Capital has found another high-profile target after turning around Virgin Australia Holdings Ltd (ASX: VGN).
According to the ASX website, Domino’s has a market capitalisation of around $1.5 billion, so even a takeover deal putting the company’s equity at $3 billion would imply a possible doubling of the Domino’s share price
Company response
After receiving a query letter from the ASX asking about the jump in the share price, the Domino’s response was less than exciting.
Despite the reporting by the AFR, Domino’s said that as far as it is aware, “it has not received any proposal from Bain Capital or had any communication with that organisation”.
It’s clear to Domino’s that the AFR article was the cause of the gain, but it called the article “incorrect”.
After coming back to trade, the Domino’s share price is now only up 7%.
What next for the Domino’s share price?
It’s intriguing that the AFR reported on a possible takeover and then Domino’s has not had any contact with Bain.
I’ll be very surprised if Bain don’t make some sort of approach to Domino’s following the reporting by the AFR.
If Bain is interested, I’d imagine the private equity group has already done some work on considering buying Domino’s shares.
Time will tell what happens from here. But, it has already risen a lot, so it may not be a great time to invest now without certainty of Bain’s interest.
There are other ASX growth shares I’d rather buy.
