👉 Background: Adore Beauty is Australia's largest online beauty store. It started back in 1999 and listed on the ASX in 2020. But since listing, Adore Beauty's share price has never been above the price it first listed at.

👉 What happened: After a few shaky years, Adore Beauty has just been approached with a takeover bid by British retailer The Hut Group (THG). THG offered a 50% premium to the share price of Adore Beauty at the time. But, Adore Beauty has reportedly declined the offer.

👉 What else: Adore reckons that the proposed offer undervalued the company. And since this announcement, Adore Beauty's share price has shot up 20% - which may just signal untapped value in the beauty brand.

What's the key learning?

💡An acquisition bid with a large premium can transform a company's landscape overnight... even if nothing has changed in the business.

💡The premium often gives shareholders more confidence in their investment because other investors 'perceive' the company to be worth more.

💡 It also gives hope to investors of a bidding war down the line. And we're seeing this dynamic play out right now with another Origin Energy. Since Origin Energy was first announced as a takeover target, its share price has jumped 56%, even though it hasn't been sold yet.

‍