In an emailed response to news service Deal Reporter, its chief investment officer Robert Beauregard was quoted as saying “I can’t hold scrip. I will oppose the deal.”
TPG is offering $5.55 a share, where investors can choose between three types of payment: full cash; half cash and half scrip; or 25 per cent in cash and 75 per cent in scrip.
The Australian Financial Review has emailed the fund for comment but had no response.
In the background, there seems to be a view that this all could be a misunderstanding, and Global Alpha could well end up supporting the transaction, or perhaps abstaining.
Why does any of this matter?
First, this offer is being done as a scheme, which means that 75 per cent of the votes cast must be in favour of the deal if the offer is to be accepted.
Global Alpha alone opposing the transaction is unlikely to derail it, but Greencross’ other large institutional investor, Lazard Asset Management, hasn’t said whether it plans to accept the offer.
However, it is understood that Lazard, which owns 11.72 per cent, will vote in favour of the deal. The fund, which doesn’t usually comment publicly on how it will vote, would be expected to take the all-cash option, because it is unable to hold scrip.
Clearly the market is factoring this in, and is betting this deal will get away — shares closed on Wednesday at $5.49, below the $5.55 offer price but well within the normal discount for a live M&A transaction.
More interesting is whether the comments from Global Alpha will have triggered truth-in-takeovers policy and whether that will be put to the test.
Usually, truth in takeovers is used to hold a bidder to account — a way of making sure a bidder that has said it will walk away from a target by a certain point sticks to its word and doesn’t extend or come back later. It’s not always set in stone. Sometimes, off the cuff comments have been made and then statements have been issued to clarify what was really meant, usually pretty quickly.
And it’s rare that investors get drawn into this sort of debate.
But last year, the Takeovers Panel did just that. It applied truth in takeovers to comments made by an investor during a M&A deal, ultimately ordering the withdrawal of Taurus’ Fund Management’s acceptances to a takeover offer for Finders by Eastern Field Developments Limited because Taurus had previously said it wouldn’t accept the offer.
Lazard’s being expected to vote for the transaction takes the heat out of this issue a little.
If Global Alpha votes against the deal, it won’t trigger any questions. If it abstains or votes in favour, it’s not entirely clear. Realistically, it’s unlikely to get before the Takeovers Panel unless someone — most likely someone who wants this deal to fall over — makes a complaint, and it’s hard to see who that might be. Though that doesn’t make it impossible.
from Just News Viral http://bit.ly/2RWyGpB
0 Comments