Even hard-nosed billionaires can yield to minority shareholders in takeover situations, as seen last Monday.
Melbourne billionaire Ralph Geminder has been compelled to raise his bid for Pact Packaging (ASX:PGH), a company under his control.
The board of the Melbourne-based packaging company has now recommended that shareholders accept the billionaire's new proposal, after previously advising them to reject a lower offer. An independent expert had valued the shares at a range between 83 and $1.24 each for minority stakeholders.
Geminder's Kin Group is now offering 84 cents per share in a what it terms its "best and final offer," implying that there will be no higher price for at least six months. This tactic is commonly used to persuade reluctant shareholders into accepting an offer. This new bid represents an increase from the initial offer of 68 cents per share, causing Pact's shares to surge by over 22% in early Monday trading.
The revised bid values the company at $289 million, a significant drop from its $480 million valuation last year.
"Investors Mutual, the second-largest and only long-standing substantial Pact shareholder, has expressed support for the increased offer price and intends to accept the offer," Kin Group informed investors on Monday, likely prompting more shareholders to follow suit.
Independent expert Kroll Australia stated that the shares would be worth between $1.06 and $1.51 in a hypothetical scenario for an offshore packaging group. Kroll also deemed a valuation range of 83¢ to $1.24 a share appropriate for the minority stake held by non-Kin Group shareholders—this is what an exasperated Geminder is now targeting.
Earlier this month, Pact finalised the sale of half of its shareholding in its crate pooling and crate manufacturing business to infrastructure investment firm Morrison & Co. Pact will retain a 50% stake in the division and an estimated cash payment of $160 million, more than enough to cover the higher offer price.
Pact shares have declined by 34.5% in the past year and by more than 79% over the past five years. They were trading at 68 cents on Friday.
Shareholders had previously delivered a first strike vote of 28% against approving the company's remuneration report at the annual meeting in November. With the new offer of 84 cents per share, this will be the only first strike.
