NZX-listed SLI Systems is the target of a takeover by Texas-based ESW Holdings.
ESW has offered to acquire all SLI shares for a price of not less than 63 cents a share, more than double the market price, and all unlisted options for prices ranging between three cents and 34 cents per option.
The bid values SLI at over $40 million, more than double the company’s market value at the close of business on Friday.
The offer is conditional on a number of usual conditions and on ESW gaining more than 90 per cent of the voting rights in SLI.
SLI chairman Greg Cross said based on feedback from shareholders the board and executive team have been considering a range of strategic options for the company as it has steered its managed services business into profitability and invested in the development of a new product to return the company to growth mode.
"While we have made good progress on both fronts this offer allows shareholders to realise a significant premium to the current market and to eliminate the ongoing execution risks of this transition phase," Cross said.
The SLI board has formed a takeover sub-committee of independent directors to respond to ESW’s takeover. This committee is in the process of preparing a target company statement that is intended to be distributed to all shareholders with the offer.
In addition to an independent valuation and appraisal of the merits of the offer by Northington Partners, the statement will include a recommendation to shareholders from independent directors.
Chapman Tripp is providing SLI with legal advice.
Cross said although the target company statement is still to be finalised it is already clear that the offer represents a premium to both the market and the roughly 25 cents a share price at which major SLI shareholders Pioneer Capital and ANZ sold their shares earlier in the year.
It is also higher than the highest valuation provided by Northington Partners in its draft report.
Disclosure: Rob O'Neill owns a small parcel of SLI shares.