Shares in Australia's largest credit collection agency, Veda Advantage (Veda), soared 7 per cent yesterday after its board accepted an $814 million offer from a private equity consortium.
Merrill Lynch Global Private Equity and Pacific Equity Partners (PEP) bid $3.61 per share for Veda, which was previously the target of a failed $3.50 per share bid by investment group Allco Equity partners (AEP) in July.
The offer gives the firm an enterprise value of $963 million.
Peter Yates' AEP owns 17 per cent of Veda, which was previously called Baycorp Advantage, and is estimated to make a pre-tax profit of $40 million should the deal go ahead.
It paid $136 million for its original stake.
The current offer represents a 28 per cent premium to the volume weighted average price of Veda shares in the month up to January 2007.
However, it is way below the September valuation by independent expert Lonergan Edwards & Associates, which priced the then Baycorp shares at between $3.92 and $4.31.
At that time Baycorp shares were trading at $3.80.
Veda Advantage shares were trading at $3.51 by early afternoon on Monday, up 23 cents on their opening value of $3.28.
PEP managing director Anthony Kerwick said he thought Veda was a high quality business that would perform well under private equity ownership.
"We expect Veda shareholders will see value in this offer and we have received indications of support from significant shareholders."
One of those shareholders is AEP, which yesterday released a statement to the Australian Stock Exchange supporting the deal.
