The credit reporting group Veda (VED) was one of the few companies whose shares were not hammered lower in yesterday’s sell-off on the ASX.
That wasn’t surprising after the company on Friday revealed a takeover approach from Equifax, one of the three largest credit reporting and scoring companies in the US.
Equifax doesn’t have a presence in Australia and buying Veda would give it a market leading role.
Veda shares ended unchanged on $2.62, eight cents under the indicated price of $2.70 from Equifax.
The indicative offer represents a 35% premium to Veda’s closing share price Thursday.
Veda’s shares, which had fallen about 13% in 2015 ahead of the approach, rallied almost 30% on Friday.
VED 1Y – Veda spikes on takeover bid
Veda holds credit information on about 20 million individuals and 5.7 million businesses in Australia and New Zealand.
Veda said its board would evaluate the offer, although there was no certainty it would result in a firm bid or that the terms would be acceptable.
Veda was floated on the ASX in late 2013 by Pacific Equity Partners, which led a takeover of the company in 2007. The private-equity firm in February moved to sell its remaining shares in Veda.
The company reported a net profit of $78.4 million on revenue of $338.8 million in the 2014-15 year to the end of June.
But yesterday’s share slump raises the question of whether Equifax might have moved too early in revealing its possible bid.
The 2% slide in the market yesterday and rising volatility suggests that Veda shares are not going to maintain this level if the bid is removed.
While that will see the shares fall and the price get cheaper the US group won’t be able to cut its price after mentioning an “indicated price”.
If the market rot continues, Equifax will be knocked down in the rush by local investors eager to sell Veda shares at a rich price.
