Takeover discussions between Iress Ltd [ASX:IRE] and EQT ended as the parties failed to agree on a deal.
The process deed incorporating exclusivity terms between both companies has been terminated.
Today’s update follows Iress earlier this month granting EQT an additional 10 days of exclusivity to complete its due diligence, which came following the conclusion of a 30-day exclusivity period started on 11 August.
Iress Ltd [ASX:IRE] share price is sliding on the news, trading at $12.11 per share at time of writing, down 10.50%.
Source: Tradingview.com
Takeover talks end
Let’s roll back a little and summarise the developments that led to today’s announcement.
Initially, on 18 June, the EQT Fund Management offered $14.80 per share to take over the financial services software company.
This bid was promptly rejected.
EQT floated the offer between $15.30 and $15.50 in the second attempt, which was once again rejected.
However, Iress allowed EQT to access information to help EQT place another bid.
This brings us to the third and last offer by EQT of $15.91 per share, upon which Iress agreed to grant EQT a 30-day period of exclusivity.
This period was extended for another 10 days to let EQT complete its due diligence.
However, both parties were unable to agree on a transaction and the exclusivity terms between them were terminated.
Iress’s Chair Roger Sharp said:
‘In our 11 August announcement, Iress advised shareholders that there was no certainty the indicative proposal would result in a binding or formal offer from EQT.
‘Nevertheless, the Board took the view that it was in the best interests of shareholders to engage further with EQT in relation to the indicative proposal.
‘The announcement today in no way impacts our strategy to accelerate growth and returns to shareholders, as detailed in our announcement of 29 July 2021 and presented at our investor strategy day.’
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What next for Iress?
Iress reported more than 10,000 clients and an annual contract value of $602.8 million in FY21.
Pro-forma revenue was up 1% to $298.7 million, while the pro-forma net profit after tax was up 9% to $27.1 million.
Now that the EQT deal is off, investors may wonder how Iress plans to accelerate its growth.
Regarding this, Sharp commented:
‘Our aim has been and remains, to double net profit after tax by 2025, with potential for further upside.
‘We have built solid foundations to capture more market share in large addressable markets and are focused on executing the plan.
‘With our strong operating businesses, favourable industry trends and growth investments, we have a positive outlook.’
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Regards,
Kiryll Prakapenka,
For Money Morning
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