Who Wants To Take Over Elite Diagnostic? The J$1.60 Offer Explained

Remember those mysterious share trades at Elite Diagnostic? Well, someone has now made a formal move to take over the company!

A few weeks ago, I told you about some very unusual trading in Elite Diagnostic shares on the Jamaica Stock Exchange.

Nearly 250 million Jamaican dollars’ worth of shares changed hands in three major transactions.

And for a few days in October, one mysterious shareholder reportedly owned more than HALF the company!

But nobody knew who was buying all those shares, or whether someone was trying to take over the medical imaging company.

Well, now we have some answers.

Two companies registered in St Lucia have emerged as Elite’s largest shareholders.

Resource Assets Limited owns 49.8 percent, while Navy Inc. owns another 20.96 percent.

Together, that’s more than 70 percent of the company!

But both companies said they were independent investors, not working together, and had no plans to buy more shares.

Now here’s the plot twist.

Just days after that disclosure, Resource Assets Limited submitted an official offer to buy ALL of Elite Diagnostic’s shares!

The price? One dollar and sixty cents Jamaican per share, in cash.

But there’s another twist.

Elite’s shares were recently trading at one dollar and seventy cents. That’s actually HIGHER than the takeover offer!

So why would shareholders accept less than they could potentially get on the stock market?

Well, the offer is roughly equivalent to Elite’s book value of one dollar and sixty-one cents per share.

But book value doesn’t necessarily reflect what a business is worth, especially one with plans to expand.

Elite’s board has not yet recommended the offer. An independent committee and financial advisers are reviewing it, and shareholders have been told to wait for the directors’ recommendation before making a decision.

So, part of the mystery has been solved. We now know who’s making a takeover bid.

But questions remain about the earlier share transactions, who ultimately controls the major shareholders, and whether one dollar and sixty cents is a fair price.

And that’s the bottom line.

If you owned Elite shares, would you accept the takeover offer or hold out for a better price?