Shares in FreeAgent were up 84% at 118.80p following the news, while RBS was up 1.2% at 261.70p.
RBS will acquire the company through RBS BidCo, a wholly-owned indirect subsidiary. The offer price represents an 86% premium to FreeAgent's closing price of 64.50p on Monday, and a 43% premium to its initial public offering price of 84p.
FreeAgent directors intend unanimously to recommend shareholders vote in favour of the deal, and have irrevocably undertaken to do so in respect of their own beneficial holdings in the company, representing in aggregate a 9.36% stake.
RBS Bidco has also received irrevocable undertakings from FreeAgent shareholders representing 41.4% of the company's issued share company. In aggregate, therefore, irrevocable undertakings to vote in favour of the deal have been received in respect of 20.7 million shares, representing 50.7% of FreeAgent's share capital.
RBS intends to operate FreeAgent as an operationally independent member of the group, retaining FreeAgent's existing management team and maintaining its current
"The combination of FreeAgent and RBS makes sense for our talented people, for our company's growth prospects, and for the shareholders who have backed our journey so far. For those shareholders, today's offer represents a 5x multiple on our current revenues as well as a very substantial premium to our IPO price," said FreeAgent Chairman Andy Roberts.
"RBS is pleased to have reached an agreement on a recommended acquisition of FreeAgent. Since the beginning of our partnership, we have been impressed by FreeAgent and its technology and are excited by the enhanced offering we will be able to provide to our customers," said RBS Chief Executive Ross McEwan.
FreeAgent subsequently released a statement on Tuesday noting RBS's announcement.
