Cambian Group PLC (LON:CMBN) shares rose by a third in value on Tuesday after it revealed it has received around a £405mln takeover proposal from social care services rival CareTech Holdings PLC (LON:CTH).
The FTSE SmallCap specialist education and behavioural health services provider said the preliminary proposal amounted to 220p per share for the company in cash or shares, a near 50% premium to Cambian's closing share price on Monday of 148.2p. In late morning trading, Cambian shares were up 33.7% to 198.2p.
The firm said CareTech has also proposed an alternative full-cash offer of 200p per share.
However, Cambian added, the bid proposal is “at a preliminary stage and there can be no certainty any offer will be made, nor as to the terms of any offer.”
In a separate response statement, AIM-listed CareTech confirmed that it is in discussions with Cambian’s board regarding a possible offer which it said would be satisfied by a combination of CareTech shares and a cash consideration funded through new debt facilities.
Caretech shares were down 2.4% at 366p.
Liberum sees strategic rationale
In a note to clients, analysts at Liberum Capital said: “We see the strategic rationale for such a deal in that it would enhance Caretech's Young People's business and help to consolidate a highly fragmented market while financially there are likely to be significant central cost synergies from a combination.”
They added: “From a Cambian shareholder perspective, the new combined entity would have a stronger strategic position, likely a deeper management team and significant scope for synergies. Hence we see the attractiveness of a cash and share offer.”
-- Adds share prices, broker comment --