In key news on Australian stocks, shares of auto parts and retailer Bapcor (AU:BAP) rallied 14% after the company confirmed the receipt of a non-binding, takeover proposal worth AU$1.83 billion from U.S.-based private equity firm Bain Capital. The company said that it received the offer after the market closed on Friday, June 7.
Details of Bain’s Takeover Offer for Bapcor
Under the terms of Bain Capital’s proposal, Bapcor shareholders would receive $5.40 per share (adjusted for any dividends paid or declared after the date of the proposal). The offer price reflects a nearly 24% premium on Bapcor stock’s closing price on June 7. Bapcor’s board cautioned that there is no guarantee that Bain Capital’s indicative proposal would lead to a binding offer or a final deal.
Bain Capital’s takeover offer comes at a time when Bapcor is struggling to thrive in a challenging business, with high interest and elevated inflation levels impacting consumers’ discretionary spending. Overall, competitive pricing and elevated costs have been weighing on the company’s margins. In May, the company warned that it expects its profits in the second half of the year to be lower than the first-half profit of $54.2 million.
Moreover, the company has been suffering due to the exit of senior management. Notably, in April, Bapcor announced that Paul Dumbrell pulled out of the role of the new CEO just one day before his date of joining. Currently, the company does not have a permanent CEO.
What is the Price Target for Bapcor?
Bapcor shares have a Hold consensus rating based on one Buy and five Hold recommendations. The average BAP stock price target of AU$5.01 implies a modest 1.5% upside potential from current levels. Shares are down about 10% year-to-date.
