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RPS Group shares soared on the acquisition deal by Tetra Tech
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RPS Group shares soared on the acquisition deal by Tetra Tech

Story Highlights

UK-based consulting company, RPS Group, agreed to the takeover deal from Tetra Tech.

Consulting firm RPS Group (GB:RPS) yesterday announced that it has agreed to a cash offer from the U.S.-based Tetra Tech (Nasdaq:TTEK) in a deal valued at £636 million.

The company also dropped out of its recommendation for an earlier bid made by Canadian consulting firm WSP Global (TSE:WSP) which earlier agreed to buy the firm in August.

The deal value from Tetra Tech signifies a premium of 7.8% on the offer price of 206p per share made by WSP Global. RPS shareholders will receive 222p per share in cash.

RPS chairman Ken Lever, said, “The board of RPS is pleased to recommend Tetra Tech’s offer, which provides our shareholders with an even greater value for their shares.”

RPS’s shares soared by almost 14% after the announcement of the results. Since August, the company’s shares have gained huge momentum after the news of a takeover started floating in the market. Overall, the stock has gained almost 100% in the last year.

With this deal, RPS is well-placed to strengthen its position and drive growth in the high-end consulting business globally.

View from the City

According to TipRanks’ analyst rating consensus, RPS Group stock has a Moderate Buy rating.

The RPS target price is 178p, which is 24.5% lower than the current level. The analyst price targets range from a low of 150p to a high of 206p.

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Post this news, Christopher Bamberry from Peel Hunt upgraded his rating on the stock from Hold to Buy. He also raised his target price from 206p to 244p.

Conclusion

The deal is expected to be completed by the end of this year. Shareholders and analysts await further developments.

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