Should You Buy SAI Global Ltd At This Share Price?

SAI Global Ltd [ASX:SAI] is something of an obscure company. They are Australian-based, and provide services like assurance and compliance. They also provide other property-related services. But the former services might not be as well-known as the latter.

SAI’s assurance services relate to assessing systems and product conformity. Think of it as ‘business reengineering’. They help businesses get the most out of their systems and products. They also provide tools for improving various processes and products.

SAI’s compliance services relate to advisory services. They advise businesses on regulatory matters, and on whether they meet standards and regulations.

As you can imagine, SAI does a lot of consulting work. Their whole business revolves around making other businesses better.

Just today, SAI’s shares jumped almost 30%, to $4.66.

What happened?

This morning, SAI entered into a binding Scheme Implementation Deed with Baring Asia Private Equity Fund VI. According to the Deed, Baring Asia could acquire 100% of shares it does not already own in SAI.

SAI shareholders stand to gain $4.75 in cash for every SAI share they own. As you can imagine, there was no mistake that shares shot up to around this number.

All SAI directors are in favour of the Scheme. Chairman Andrew Dutton stated:

Baring Asia’s proposal is compelling and represents a significant premium to SAI’s share price. The 100% cash consideration provides SAI shareholders with certainty of value and the opportunity to realise their investment in full for cash. We expect that, if implemented, the Scheme will have a limited impact on SAI’s continuing operations and represents an exciting opportunity for the organisation.

What now for SAI Global Ltd?

Right now it seems like SAI will be taken over. The board is behind the Scheme, and shareholders will likely sell out for a 30% premium. After all, SAI is a $766 million dollar company. Double-digit returns in a day don’t come by often.

However, there is a possibility that the acquisition may not go through. Shareholders have to actually approve the Scheme first. The court needs to approve the deal also. But, barring an unforeseen incident, it looks like Baring Asia will be welcoming SAI to their portfolio.

Härje Ronngard,

Junior Analyst, Money Morning

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