Volaris increases its all cash purchase offer to acquire Adapt IT

Adapt IT’s independent board says the Volaris proposal is within a fair price range.

The bid for total control of Durban-based Adapt IT is heating up. Days after an increased offer from local acquisition firm Huge Group, Canadian software acquisitions firm Volaris has come to the table with a new cash offer.

Volaris is offering R7.00 per share, while Huge Group is offering R9.09 per share in a share swap deal. So Adapt IT shareholders have to decide whether to take the cash and call it quits or accept a share swap deal and grow the business under Huge Group.

But it’s not that simple. At least 44 percent of Adapt IT shareholders have committed to accepting Volaris’s offer, and the Toronto-based company appears to be the preferred choice for Adapt IT shareholders. Moreover, they’ve labelled Huge’s offer as hostile and unsolicited since its first share swap offer in January.

Adapt IT appointed an independent board, Nodus Capital, to evaluate both offers and report to shareholders. Nodus said the Volaris offer, although less than Huge Group, is fair and reasonable because it’s a cash bid.

If successful, Volaris plans to extend its reach in Africa with the Durban-based Adapt IT at the forefront of its operations under the same management. Nodus also specifically flagged Huge Group’s non-compliant status around B-BBEE as a significant risk. “The fact that the Huge offer is in the form of Huge shares means that Adapt IT shareholders who accept the offer would become investors in Huge and, through their shareholding in Huge, remain indirect investors in Adapt IT,” it said.

Huge Group CEO James Herbst hit back, calling the independent board biased, saying a deal with foreigners unfamiliar with South Africa’s transformation agenda, would also alter the Adapt IT’s leadership and ultimately its BEE compliance.