The punters hopped into shares of Patties Foods (PFL) yesterday after the company confirmed that it is talking to a private equity company about a possible bid.
The shares leapt more than 20% to $1.60, after touching $1.64, the highest the shares have been since early 2013. They ended up 17% at $1.56 as speculators realised that there was little hope of a takeover battle with a counter offer appearing.
Patties shares had traded at $1.33 on Friday. The shares have rallied 23% from a low of $1.08 hit on April 13, all without a query from regulators.
PFL 1Y – Private equity set to bite into Patties
Patties and Pacific Equity Partners are in talks, with the pie maker saying on Monday that exploring the takeover offer was in the best interests of shareholders.
Pacific Equity has offered to buy all of Patties at $1.65 a share, including any dividends paid after the proposal date and with a possible unquoted equity alternative.
The total offer is worth about $300 million, Patties confirmed.
This follows a slow recovery for the shares after a rotten 2015 in which an outbreak of Hepatitis A linked to packets of Nanna’s frozen berries which forced a massive product recall and damaged profits, dropping them 88%.
Patties chairman Mark Smith said in a statement to the ASX that the discussion with Pacific Equity was ongoing and there was no guarantee it would result in a formal offer to shareholders.
"The board remains confident in management’s plans for growth in the core brands and the business is experiencing strong momentum," Mr Smith said. Greenhill & Co and Minster Ellison are advising Patties during the negotiations.
