Traffic tech stock Redflex gets a takeover offer at a 130pc premium; shares surge accordingly

It’s a happy Friday for shareholders of Redflex Holdings (ASX:RDF), which has received a takeover offer at a 130 per cent premium.

The company, which makes traffic cameras, closed on Thursday at 40 cents per share.

But this morning it revealed a 92 cent per share takeover offer from NASDAQ listed toll enforcement company Verra Mobility (NDQ:VRRM).

The offer landed on the table after shares had been on a rollercoaster ride in recent months. When COVID-19 hit, Redflex and other traffic tech stocks warned revenues could fall as less cars on the road meant less revenue for its clients.

But the company began FY21 with a bang receiving $19.6 million in orders in the first quarter.

The momentum appeared to be continuing into the next quarter. Last month the company announced a $7m contract to supply cameras to the West Gate Tunnel project in Melbourne.

Prior to today Redflex shares were still down in the last 12 months. But this morning shares more than doubled at market open in conjunction with Verra’s offer.

Redflex Holdings (ASX:RDF) share price chart

‘Certain and immediate value’

The Redflex board has unanimously backed the bid.

“The Scheme provides Redflex shareholders with an opportunity to realise certain and immediate value for their shares, at a significant premium to recent trading and at an attractive valuation multiple,” said chairman Adam Gray.

“We are pleased that a leading industry player such as Verra Mobility has recognised the strategic value of our company.”

Verra’s boss, David Roberts, said the acquisition would help in “expanding our portfolio of safe city solutions and solidifying our position as a global leader in smart transportation”.