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Trade Me Takeover at $6.40 - Grant Davies talk to about the offer

A takeover offer has been made for Trade Me, with an offer price of $6.40 a share.

Trade Me shares leapt 18 per cent, or 96 cents, to $6.06 immediately after the offer was revealed to the NZX.

The offer would value Trade Me at $2.5 billion, about $500m more than its sharemarket value when trading closed on Tuesday.

Trade Me described the offer from Apax Partners, which is a British private equity company, as "a preliminary, non-binding, indicative proposal".

Apax Partners was offering to buy the entire business for a cash payment, but the offer was subject to a number of conditions, including the completion of due diligence, Trade Me said. 

Trade Me's board has allowed Ajax exclusive access to its books until December 12, so it can firm up a binding offer.

Trade Me said in its NZX statement that it would update the market on any material developments. 

Offer 'seems fair'

Grant Davies, and investment advisor at Christchurch wealth management firm Hamilton Hindin Greene said the offer, a significant premium to Trade Me's recent share price, was likely to be supported by shareholders.

"It's a pretty decent premium. It's a premium to the analyst target prices, it's a premium to what it has ever traded at," Davies said.

Trade Me had moved out of the strong growth phase of its early years and was now more of a "cash cow", Davies said.

"New Zealand investors have been pretty happy to take the quick buck in the past, and with Trade Me not exactly in the high growth category anymore, it's probably likely to go through, subject to the conditions of the offer, of course, which we don't have exact details on yet."

While the offer was "not exactly a done deal", Davies said Apax were likely to be serious about making an offer.

"These guys are London-based private equity. No doubt they'll have their due diligence to do, but they're not playing silly buggers, that's for sure."

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