After Humanforce offered $0.165 to acquire HR software company IntelliHR (ASX: IHR), England-based software company The Access Group, or TAG, has upped the offer by 21.2% to $0.20 per share. For IntelliHR shareholders, the latter is a superior and more attractive option. But whether votes would work out in TAG’s favour is not certain.

TAG’s offer implies an equity value of approximately $70.11 million. On the other hand, the Humanforce offer brings a value of only $57.84 million. The premium that TAG would pay is also 30% greater than Humanforce.

The TAG Binding Offer to acquire IntelliHR is subject to several conditions, including approval from Australia’s Foreign Investment Review Board, entering into a Scheme Implementation Deed, approval by IntelliHR’s shareholders, and relevant Court approval. The Company’s performance rights will be handled similarly to the previous Humanforce Scheme, and the offer will be funded through TAG’s existing debt facility on a certain funds basis.

The TAG offer includes a provision for an interest-free working capital finance facility for IntelliHR, which is being evaluated. The expected timeline for the Scheme of Arrangement is similar to the previous Humanforce Scheme, with implementation anticipated to occur in late May or June 2023.

In H1 FY23, even as the Company struggled with cash, its revenue increased 67% on H1 FY22 to $3.8 million. IntelliHR’s loss decreased by 15% to $3.9 million. Recession, layoffs, and inflation forced a slowdown in the digital HR department, but now, many companies are adopting virtual engagement methods, which might put the spotlight back on HR software companies, like IntelliHR. That said, for future growth, the Company would have to either raise additional capital or get acquired. And it seems like the latter plan is going just fine.

On January 31, 2023, IntelliHR entered into an acquisition deal with workforce management company Humanforce, and was to receive $0.11 cash per share. Impressed by the Company’s international growth, companies want in on the action, despite IntelliHR’s cash burn.

All shareholders were in favour of the Humanforce acquisition, till a superior offer by TAG came around. On March 3, 2023, TAG offered a counterproposal to acquire all shares at $0.14 per share. Since then, Humanforce upped its price to $0.165 as TAG increased its offer to $0.20. 

Of course, the hammer is yet to fall on Humanforce’s efforts. IntelliHR has started the matching rights process with Humanforce, which gives Humanforce five business days to offer a better proposal for the IHR Board to consider. 

The IntelliHR Board has formed an independent committee to manage the Humanforce and TAG transactions, consisting of directors Tony Bellas, Matt Donovan, and Belle Lajoie.

The ball is in Humanforce’s court, and it is uncertain whether it will raise its price further. All things considered, IntelliHR is sitting in a sweet spot with plenty to offer to its shareholders.