XCH.L Share News (XCH)

(ShareCast News) - Shares in business outsourcer Xchanging rocketed after the company confirmed it has received approaches from peer Capita and private equity group Apollo Global Management regarding offers for the company.Capita said it has been in discussions with the board of Xchanging since early August about a possible cash offer for the company.Capita said that on 24 September, it made a final proposal in relation to a possible cash offer of 160p per Xchanging share, which represents a premium of 58% to the closing price per Xchanging share on that day and a premium of 45% to the closing price per Xchanging share on 2 October, which was the last trading day before the date of the announcement.On 29 September, the board of Xchanging confirmed that it would be willing to recommend Capita's final proposal and Capita was granted due diligence access.Capita said the acquisition of Xchanging would be consistent with its stated strategy of acquiring businesses that build capability in existing operations, allow the group to enter new attractive industry segments and enhance its future organic growth potential.It said the deal would position Capita as one of the leading providers of technology enabled business process services in the attractive international insurance and asset administration industries and provide a stronger platform for Xchanging to accelerate sales growth and to develop its software, technology and procurement solutions under Capita's stewardship.In addition, it would enable Capital to secure at least £35m in cost synergy benefits driven by head office, shared services and IT efficiencies.If the deal goes through, it's expected to be immediately earnings-accretive for Capita and to deliver returns significantly in excess of its cost of capital.Capita added that the offer would likely be funded substantially from the net proceeds of a placing of new shares.Xchanging has also received a separate approach from Apollo Global Management to acquire the company at 170p per share in cash and has granted the company due diligence access."Clearly the bids seek value in the insurance franchise, in our view," said Shore Capital. "We cannot discount the emergence of a yet higher offer from a further party, perhaps a peer in global financial services support seeking additional synergies; thus we believe that Xchanging is now firmly in play."At 0820 BST, Xchanging shares were up 49% at 165p, while Capita was 1% higher at 1,225p.