The mop-up takeover of WPP AUNZ by its majority shareholder WPP plc looks like its back on track after a surprise 27% lift in the cash offer price.
The 70 cents a share offer gives the mop up a better chance of success than the original 55 cents a share first offer made 18 days ago.
That offer looked on the cheap side according to a few analysts and shareholders.
The higher price will allow the bid a better chance of getting through a scheme of arrangement meeting of the company’s shareholders which needs 75% acceptance.
WPP plc already owns 61.5% of the company and is attempting to acquire the remaining shares.
Aside from the offer price, all other terms of the proposal remain unchanged. The revised offer gives WPP AUNZ an implied enterprise value of $717 million, according to documents filed with the ASX yesterday.
The company’s undisturbed share price is 41 cents, with the share price closing at 57 cents on December 15 the day before the halt was called on Wednesday.
The higher than the bid price was always a sign that hedge funds and other speculators reckoned WPP would have to lift the price. The 27% increase seems pretty decisive.
WPP ANZ also released updated outlooks for 2020 and 2021 trading with a return to dividends suggested next year.
For December 31, 2020, year WPP AUNZ predicted earnings before interest and tax (EBIT) of $59-62 million, earnings before interest, tax, depreciation, and amortisation (EBITDA) of $75-78 million, and net revenues of between $607 million and $610 million. That’s down around 15% year-on-year due to the impacts of the COVID-19 pandemic.
For 2021, WPP AUNZ anticipates EBIT of $85-95 million, EBITDA of $100-110 million, and net sales of $630-650 million.
These predictions assume the economy will continue to recover from its pandemic battering, and “there are no new material COVID-related economic impacts and restrictions”.
Next year, the business is expecting to resume the payment of dividends and anticipates declaring a dividend in its FY20 result in late February.
