What happened

Shares of Mitek Systems (NASDAQ:MITK), a small-cap company focused on mobile image capture and identity verification software, rose 14% as of 10:24 a.m. EDT on Wednesday. The huge jump is a response to the news that a hedge fund has made an offer to acquire the entire business. 

So what

Elliott Management's software company ASG Technologies stated that it has made an offer to buy Mitek Systems for $10 per share. The offer values the company at $425 million when including debt.

In a letter published to investors, ASG stated, "We strongly believe that the best future for Mitek's products is as a part of a broader platform at ASG, where we can invest behind extending the Company's identity verification solutions via further automation."

Man holding bills fanned out in front of him

Image source: Getty Images.

Traders responded to the bid by sending shares screaming higher. 

Now what

ASG's offer comes at an interesting time in Mitek's history because the company is set to lose both its CEO and CFO in the near future. That fact might spook investors into accepting ASG's offer as is.

However, it's worth pointing out that ASG tried to buy Mitek in early October, but the company promptly rejected the takeover offer. That could mean that the board and management team are holding out for a more substantial premium.

It's anyone's guess as to what will happen next, but with shares currently trading for about $9.23, it is clear that Wall Street is skeptical about this deal's chances of going through. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.