Digicore, Novatel sign implementation agreement
Shares in JSE-listed Digicore surged by 15% on Friday morning after the company received a R1-billion buy-out offer from Nasdaq-listed wireless broadband provider Novatel Wireless.
Months-long discussions between the San Diego-headquartered Novatel and the fleet management and vehicle-tracking group ended this week with a signed transaction implementation agreement.
The deal, through a scheme of arrangement or a tabled substitute, would see Novatel pay R4.40 a share for around 249-million shares, representing a 67.9% premium on the 30-day volume weighted average traded price of R2.62 apiece on May 7, when discussions started.
Novatel believed the absorption of Digicore as a subsidiary would establish the US firm’s position as a significant player in the global asset tracking and management market and would provide an immediate top-line contribution and a meaningful earnings contribution in 2016.
Digicore had just emerged from an extensive turnaround over the last year to bring it back into the black after being hammered by losses in 2013.
The group, which remained in the black during the first half of the year, was "cautiously optimistic" as it entered the final stretch of the year with its focus on delivering higher growth in revenue, reining in operating costs and stabilising its earnings.
The transaction remained subject to conditions precedent.
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