The Bingo Industries Ltd (ASX: BIN) share price is up more than 6% after agreeing a takeover deal with a bidder.
What’s the takeover?
Bingo has entered into a scheme implementation deed with Macquarie Group Ltd’s (ASX: MQG) Macquarie Infrastructure and Real Assets and its managed funds (MIRA) to buy 100% of the business.
Shareholders will have the option to receive either $3.45 cash per Bingo share, or a mix of cash and unlisted shares as an alternative.
This acquisition represents a 33% premium to the Bingo one-month (volume weighted) average price up to and including 18 January 2021.
It also represents a 26% premium to the last undisturbed closing price of Bingo shares of $2.74.
This is an acquisition multiple of 19.5x the last 12 months of EBITDA (EBITDA explained) to December 2020. However, it has an implied forward acquisition EBITDA multiple of approximately 15.1x FY22 consensus EBITDA. This is what the market thinks EBITDA will be.
Special dividend
Bingo’s board intends to declare a fully franked special dividend of $0.117 per share. That will enable shares to receive franking credits of up to $0.05 per share. This special dividend will reduce the cash consideration of $3.45 per share.
What do the board think?
Bingo’s independent board committee and other Bingo recommending directors have unanimously recommended the takeover in the absence of a superior proposal and subject to an independent expert concluding the takeover deal is fair and reasonable.
Bingo independent board committee Chairperson Elizabeth Crouch said: “The IBC is pleased to have reached unanimous agreement with MIRA on the proposal.
“The IBC has explored a number of alternatives, including standalone value creation opportunities and alternative bidder interest. After considering future opportunities for the business, along with economic, regulatory and execution risks, the IBC has unanimously concluded that the scheme is a compelling option which realises attractive value for our shareholders.”
Summary thoughts on the Bingo share price
This seems like a solid offer for Bingo shareholders. It’s more than the share price has ever traded at.
The business has been through a rollercoaster over the last few years, but this is a good enough offer to take it off the market. It will be interesting to see if it ever comes back onto the ASX boards again.
Investors could decide to re-invest the money into other quality ASX growth shares or ASX dividend shares with good long term potential.
