Adapt IT tells shareholders not to feel pressured over buyout decisions

Adapt IT tells shareholders not to feel pressured over buyout decisions

The Huge Group is setting a premature deadline regarding its offer, company says

Adapt IT CEO Sbu Shabalala. Picture: SUNDAY TIMES Adapt IT has warned shareholders not to be pressured into making a decision regarding an unsolicited buyout offer by technology company Huge Group.

Earlier this year, Huge made an R800m takeover bid for its peer Adapt IT, which provides software solutions to the education, manufacturing, energy, financial services, communications and hospitality sectors.

Adapt IT is also reviewing an offer from Canadian-based Volaris.

On Wednesday, Adapt IT, headed by CEO Sbu Shabalala, said it has received information that some of its shareholders are being coerced to make a decision about the Huge offer by April 22. However, shareholders have until July 23 to do so.

“It has come to the company’s attention that certain central securities depository participants are requesting Adapt IT shareholders [to] respond to the Huge offer by [Friday], April 22 2021, which is not the deadline for the offer,” said Adapt IT.

“Adapt IT therefore urges its shareholders not to make any decisions, take any actions or provide any undertakings in relation to the Huge offer until they have received the opinions of the independent board and the independent expert as to whether the Huge offer consideration is fair and reasonable.”

Adapt IT has constituted an independent board to advise on the merits of Huge’s offer. That board is yet to make a recommendation. Once all the assessments have been made, Adapt IT expects to issue a response circular about the Huge offer on May 17.

The battle to buy Adapt IT’s business intensified earlier in April when Volaris made a R6.50 per share offer, or a 56% premium on the IT group’s closing share price, on April 1, throwing into doubt the all-paper takeover offer from Huge.

Huge Group CEO James Herbst suggested that Adapt IT’s management is nervous that shareholders may accept its offer over the Volaris one.

“The only thing one can draw off the announcement is that there must be some level of angst by Adapt IT that their shareholders may accept the Huge offer,” Herbst told Business Day.

“Why should they be anxious if it is all about their shareholders and making decisions that are good for them. You only get anxious if your shareholder might do something you do not want them to do ... like accept the Huge Offer when you want them to accept the Volaris cash exit offer,” Herbst said.

Adapt IT said it expects that the circular containing the Volaris offer will also be issued in May, “well before the closing of the Huge offer and with sufficient time for shareholders to consider it before the Huge offer closes”.

All this comes on the heels of the Financial Sector Conduct Authority (FSCA) clearing Huge of suspicious activity related to its buyout offer for Adapt IT.

The ruling, made last week, followed an investigation by the FSCA triggered by Adapt IT’s board, after concerns raised by Kerem Aksoy of Glacier Pass Management, a New York-based investment firm, about Huge Group’s trading activity.

Source: Business Day