Bapcor shares lift as analyst deems Bain offer as 'too cheap'
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The news: Shares in Bapcor have risen for a second straight session on hopes of an improved takeover offer after analysts termed Bain Capital’s bid “too cheap”.
The numbers: The troubled auto parts retailer on Tuesday said it had received a takeover offer from private equity firm Bain Capital worth $5.40 per share.
Shares jumped more than 10% on Tuesday and are up a further 2.6% to $5.10 in early trading on Wednesday.
The context: Morningstar analyst Angus Hewitt said Bain was looking to pick up the company on the cheap, noting its $5.40 a share proposal is 29% below Morningstar’s $7.30 a share fair value estimate.
Analysts at Citi also said they were not surprised by the bid given that Bapcor is “a good business operating in a favourable industry structure” but said it came at an opportunistic time where governance and management had been “suboptimal”.
What they said: “We think Bain is looking to capitalise on share price weakness following a softer performance in the retail business and management tumult,” Hewitt said in a note.
The sources: Morningstar research, Citi research
