Adapt IT closed 2.81% higher yesterday on news that the group was in unspecified talks.
Adapt IT has a history of growing through acquisitions, which are expected to account for 25% of top line growth in the next year. The group is also looking into several possible share placements that will boost its black ownership from the current 30% to 50%, although, as of August, it had not set a timeframe for the equity changes.
Yesterday, it said it had "entered into negotiations in respect of a possible acquisition". If the deal goes through, it could have a material effect on the company's share price, so shareholders need to be cautious when trading in its stock.
The news led its shares to a 675c high in intraday trading before the stock closed at 622c, a 17c or 2.81% gain on the day. By comparison, the JSE's all share index closed up 1.96%.
Some 145 820 shares in the company, which provides software to assorted sectors such as mining, sugar and education, changed hands during the day. However, its close was off its 52-week high of 949c, which occurred on 21 April, but a vast improvement on the 52-week low of 370c it hit about a year ago.
In the year to June, Adapt IT's headline earnings per share leapt 55.1%, while revenue gained 33.9% to R408.5 million, and its bottom line grew from R26 million to R38.9 million.
Acquisitions accounted for 17% of its top line improvement, down from the 26% reported at half year, but this percentage is expected to improve to 25% next year. The group has negligible gearing and can boost debt to 50% of its balance sheet value.
CEO Sbu Shabalala noted at the time the group's growth exceeded ICT industry averages. "This has not only attracted additional institutional following, but increased shareholder confidence in Adapt IT and its development strategy."
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