German-based car parts giant (the world’s biggest actually), Robert Bosch GmbH, will make an off-market takeover bid for all the shares in Pacifica Group that it does not already hold and effectively bury the company.
Bosch, which currently holds about 76.6% of Pacifica, said yesterday it would offer 23 cents cash for each Pacifica share.
That was a 7 cents a share premium to the depressed 16 cents a share it traded at on Monday.
They closed up 5.5 cents at 21.5 cents.
The bid finally ends life for Pacifica, which at one stage was a white hope of the Australian automotive component industry, but it has been undone by the slump in the global industry, especially in the US where a major customer has been the now bankrupt General Motors.
In February, Pacifica reported a bottom-line net loss of $242 million for 2008 and said it expected to report a third consecutive operating loss in 2009.
The increasing problems at GM and its sliding output has made a loss a sure thing for this year.
Bosch bid for the group back in 2006-07, but came up short, despite offering around $2.20 a share. An unnamed party had offered $2.40 a share.
A group of shareholders held out and wouldn’t accept the Bosch offer.
The company had a small loss in 2007 and then the huge one the following year as the credit crunch, high petrol prices, and then the recession and the impact of the Lehman Brothers collapse came together to send the US and global car industries into a tailspin.
Bosch originally bid $2.05 back in 2006 and then upped it to $2.20, at which Pacifica was valued at close to $300 million.
At yesterday’s offer price, the company was valued at just over $30 million.
Bosch said the offer price represented a 44% premium to the last traded price of Pacifica prior to the announcement of the full takeover offer.
"Bosch believes that the offer provides the remaining minority shareholders in Pacifica with a compelling opportunity to receive a cash price for their shares in an environment where the outlook for Pacifica’s earnings is uncertain," Bosch said in a statement to the Australian stock exchange.
Bosch’s offer is conditional upon it receiving sufficient acceptances to proceed to compulsory acquisition of Pacifica, and approval from the Foreign Investment Review Board.
Bosch will fund the acquisition from existing cash resources within the Bosch Group.
Pacifica said earlier this month in June that the bankruptcy of GM was likely to have an adverse impact on earnings in 2009, when the company’s operating result was expected to remain a loss.
Pacifica said at its annual general meeting in May that it may seek equity funding as its earnings were hurt by a the sharp fall in demand for large passenger cars and trucks due to the global economic crisis.
Bosch bid puts an end to that and will help put Pacifica’s stranded shareholders out of their misery.
