HomeServe shares rally as takeover is confirmed
Shares of UK home repairs insurance company HomeServe have risen over 10% in early morning trade as the company has agreed a takeover offer of £12 per share from Canadian investment firm Brookfield.
(Video Transcript)
HomeServe shares rally
HomeServe plc has agreed to be taken over by Canadian investment firm Brookfield for almost £4.1 billion.
The interest from the Canadian company was first made public on the 24th March and today the board has agreed to a £12 per share cash deal. This is a 71% premium to the stock price prior to the takeover announcement that started back in April.
Technical analysis
Let's take a look now at a chart of HomeServe shares because, as you can see, we've seen a really strong momentum here in that rally, especially back here on the 24th March. This was, as I was saying earlier, the first time that Brookfield had announced its interest in HomeServe.
We have seen that strong rally back here, once again in April when HomeServe actually confirmed they were in talks with the Toronto-based company. Strong momentum there following all the way into today where we have seen that deal announced. Once again showing a premium over the share price back here in March when the talk started, but also a premium to current share price as well.
This is still below the 2020 highs back here, we saw them in August two years ago, almost. This was obviously on the back of that rally from the COVID-19 pandemic.
Nonetheless we still have some good momentum from HomeServe's share price, as you can see. The RSI is firmly above the overbought territory showing those buyers are still in control.
We may have a little bit of a retracement from this move, we've already seen pushing away slightly from those highs. And after the previous three strong rallies that we've seen, we have seen a period of consolidation, a bit of a retracement.
Those investors are gathering a bit of a pause for breath, discovering where the next move is going to come. But nonetheless, that strong momentum there is still holding, likely to hit those £12 per share in the next few days as more investors digest this news.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
