‘Go away’ (said quietly), ‘for a while at least’ seems to have been the message yesterday from Automotive Holdings Group (AHG) to its biggest shareholder, AP Eagers and its all paper takeover offer.
Eagers has started sending out its takeover documentation to AHG shareholders, even though it remains highly condition and doesn’t carry a recommendation from the target company’s board.
That’s why Automotive Holdings yesterday told shareholders to sit tight and do nothing until the target statement to be sent out on May 8.
It’s very hard for AHG to start a full-on defence seeing Eagers owns nearly 29% of the company and could easily exert its authority in the event of the bid failing.
The statement will contain the board’s recommendation on the offer, based on a valuation of the company by KPMG.
AHG also noted today that at more than $2.40 ($2.44 yesterday), its shares are trading well above the $2.38 value implied by AP Eagers’ one-for-3.8 share offer.
The combined group would have 310 car and truck dealerships, including 41 in WA, and nearly 12% of the Australian new vehicle market. For that reason, there is not expected to be any competition concerns.
AP Eagers already owns 28.8% of AHG.
“There are a number of factors that will determine whether or not the conditions to the Offer will ultimately be satisfied, and when. A number of these conditions depend on the response or approach of third parties, and are outside of the control of both AP Eagers and AHG,” AHG directors told shareholders in Tuesday’s statement.
“According to the Bidder’s Statement, AP Eagers currently intends to seek merger authorisation from the ACCC and expects it will take a minimum of 90 days after lodgement of a valid application for this to receive a determination from the ACCC.
“Your Board is committed to acting in the best interests of and maximising value for all AHG shareholders and will make further announcements so that shareholders remain fully informed,” AHG said.
AHG shares rose 0.4% to $2.44 while AP Eagers shares rose 0.9% to $8.66, valuing its offer at $2.28 an AHG share against the notional $2.38 when the deal was announced on April 5.
