Insights

Dragontail Systems (ASX:DTS) share price soars on Yum! Brands buyout

The Dragontail Systems (ASX: DTS) share price has soared today after a buyout offer from Pizza Hut operator, Yum! Brands.
The post Dragontail Systems (ASX:DTS) share price soars on Yum! Brands buyout appeared first on The Motley Fool Australia. –

The Dragontail Systems Ltd (ASX: DTS) share price has delivered an outstanding performance for shareholders today.

At the market close, the restaurant-focused technology company’s shares were up 24.3% trading at 23 cents.

Tantalising offer ignites Dragontail share price

Investors have really sunk their teeth into the Dragontail share price today after notifying the market of its entry into a scheme implementation agreement.

The agreement is with Yum! Connect Australia, which is an entity controlled by Yum! Brands Inc (NYSE: YUM). The real spicy part of the agreement is Yum! Brands will acquire 100% of the ASX-listed small-cap for $93.5 million.

Based on the agreed terms, shareholders will be entitled to receive 23.5 cents per share once all conditions are satisfied. The offer represents a 30.5% premium over Dragontail’s closing price on Wednesday.

If you’re unaware, Yum! Brands operates fast food brands globally – including KFC, Pizza Hut and Taco Bell. Its market capitalisation is in excess of US$35 billion, which roughly equates to the same size as five Domino’s Pizza Enterprises Ltd (ASX: DMP).

Will Dominos burn Dragontail?

Dragontail being acquired might have been good for its share price, but it could make partnerships messy. The company’s quality control system is used by Dominos, known as the pizza checker.

As you might know, Dominos and Pizza Hut (operated by Yum! Brands) are in competition with each other… Awkward! At this stage, it is unknown what Dominos will do now that its quality control system might be owned by a rival.

Where to next?

If the buyout is approved, the company intends to dispatch a scheme booklet to shareholders around July 2021 to vote on approving the proposal.

Dragontail shareholders must be pleased with their investment over the past year. Accounting for today’s gain, the Dragontail share price has returned 109% in the last year. Far exceeding the 23% from the S&P/ASX 200 Index (ASX: XJO).

Learn where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Here’s why the Domino’s (ASX:DMP) share price is sizzling hot today
Why Corp Travel, Domino’s, Kogan, & Zip shares are storming higher

The Domino’s (ASX:DMP) share price is up 22% this year
2 top ASX growth shares rated as buys in May

2 quality ASX shares that could be fantastic buy and hold options

The post Dragontail Systems (ASX:DTS) share price soars on Yum! Brands buyout appeared first on The Motley Fool Australia.

Important Notice
Trade The US Market With ZERO Brokerage* + FREE Access To Trading Ideas & Value Analysis Tools. Click Here!