Why did DWF shares surge 40% today?

Shares of DWF Group (LSE: DWF) surged today following the announcement of ongoing discussions with Inflexion Private Equity Partners based in London. The talks revolve around a potential buyout agreement, which could be valued at approximately £342 million. News of the possible takeover sent DWF shares soaring by as much as 40% to 92 pence each, before settling at 87 pence.

According to a statement released by DWF to the London Stock Exchange, the proposed deal offers its shareholders an attractive price of 100 pence per share. This figure includes a cash consideration of 97 pence and a dividend of 3 pence for the six-month period leading up to April 30. In terms of premium, the offer represents a significant 52.7% increase over DWF’s closing price from last Friday.

The FTSE All-Share listed firm specialises in providing legal and business services to companies operating across various sectors, including finance, transportation, energy and natural resources. In the fiscal year 2022, the firm reported an annual revenue of approximately £350 million.

This takeover bid comes after a relatively calm period for dealmaking, as turbulent markets and rising interest rates have discouraged potential buyers. However, in a recent half-year review of takeover activity in the UK, Peel Hunt, a London-listed investment bank, noted that dealmaking had shown signs of rebounding to a certain extent this year.

Private equity’s interest in listed firms has also made a comeback, albeit without the level of conviction that many had anticipated. Peel Hunt’s analysis reveals that buyers presented only £12 billion worth of take-private deals in the six months leading up to June, marking a 45% decrease compared to the second half of the previous year.