The share price of financial services group MFS has bounced back following news it is the target of a takeover bid by rival firm City Pacific.
Australian property company and fund manager City Pacific has made a $1.33 billion bid for a large part of MFS. The deal excludes MFS' Stella Tourism Group.
The sale would see the group jettison its investment and funds management businesses.
The conditional offer is for 225 million new City Pacific shares, valued at $3.70 per share, in consideration for the acquisition of MFS's financial services business.
The valuation assumes debt of $500 million for MFS's financial unit, a statement to the Australian Securities Exchange (ASX) said.
Shares in MFS, which closed at $4.33 on January 9 had fallen to $3.55 by close of business on January 11. More than 26 million shares traded in those two days. A total of only 4.8 million traded in the three days previously.
Commenting on the increased volume of trade, the group's company secretary Kim Kercher said: "Other than for the matters disclosed to the ASX by the company and City Pacific Limited this morning (yesterday), which the company does not believe in any way contributed to the share price movements referred to in your letter, the company is not aware of any information or fact or circumstance concerning it that has not been announced which, if known, could be an explanation for recent trading in the securities of the company".
Last year MFS announced a net profit after tax of $185 million in the 12 months to June 30, compared to $97.4 million in the previous year.
Assets under management were $5.26 billion at June 30 2007, compared to $2.9 billion at June 30 2006.
After the 2007 result MFS Australian Funds Management chief executive Craig White said the group aimed to reach at least $10 billion of fee-paying AUM by June 30 this year. MFS shares closed at $3.94 yesterday.
