The EML Payments Ltd (ASX: EML) share price has surged around 10% after receiving some takeover interest.
What happened to the EML share price?
EML noted media speculation by the Australian Financial Review about takeover interest from Bain Capital.
The payments business confirmed that earlier in the year, it was in discussions with Bain Capital regarding a potential change of control proposal.
However, those discussions have now ceased.
It was noted that the board of EML will always consider proposals presented to the company and is “fully committed to acting in the best interests of, and maximising value for, EML shareholders.”
EML noted that it appointed Goldman Sachs as its financial adviser and Herbert Smith Freehills as its legal adviser.
Why is the EML share price rising?
It may be confusing that the potential bidder walked away, yet the shares are up.
Investors may be thinking that Bain Capital will come back with a concrete offer. Or perhaps other interested parties could come forward now they know that EML is a potential takeover target.
Over the last year, the EML share price has fallen around 50%. I’m not surprised that Bain Capital was interested in the business after such a heavy fall.
I believe that EML Payments has an attractive long-term opportunity in the payments space. It’s growing globally, which gives it plenty of areas where it can grow. Europe is a large market for the company.
The business’ entry into the European employee benefits market (EBM) with Up Spain is an exciting growth avenue considering the EBM global market is worth over A$88 billion and is expected to grow by A$20 billion to 2025. Up Group operates in 28 countries, so there is potential to work with the rest of the business.
Is it still an opportunity?
With the EML share price up around 10%, it could be worth asking whether it’s still an opportunity. I think it is. EML shares are valued at 18 times the estimated earnings for the 2024 financial year, according to CommSec.
I think that the short-term pain looks like an opportunistic time to buy, particularly as EML can benefit from rising interest rates so it can earn more money on the cash it’s holding.