Praemium has rejected an “unsolicited” $785 million merger offer from fellow investment platform provider Netwealth after the board unanimously concluded that the proposal undervalues the business and isn’t in the best interests of its shareholders.
According to a media release sent Tuesday morning, Praemium received a proposal from Netwealth to acquire 100 per cent of its shares in exchange for Netwealth shares plus contingent cash consideration.
Under the terms Praemium shareholders would receive one Netwealth share for every 11.96 Praemium shares, which implies a value of $1.50 per Praemium share as opposed to the $1.24 trading price at Monday afternoon.
Despite the 29 per cent premium, Praemium says the offer significantly undervalues its “current performance and near-term trajectory”, as well as its “market leadership and superior technology”.
Further, Praemium says, the offer does not appropriately value its “growth momentum”, the “significant valuation upside to shareholders” and the “contribution Praemium would make to a combined entity”.
The Melbourne-based Praemium, which took over fellow Queen Street provider Powerwrap last July, now finds itself the target in an investment platform rife with consolidation activity.
Despite the rebuff, Praemium has not withdrawn interest completely.
“The board is open to engagement at an appropriate valuation but is mindful that any proposals put forward should appropriately reflect Praemium’s market position and growth potential as well as recent activity in the sector,” Praemium stated.