Australia’s leading motoring group, Automotive Holdings Group Limited (ASX: AHG) or a proposed merger. Automotive Holdings had already received an offer by A.P. Eagers Limited to acquire the ordinary shares in AHG it does not already own by offering 1 APE Share for every 3.8 AHG Shares. However, now A.P. Eagers Limited has agreed to vary its all-scrip offer by increasing the consideration offered from one APE Share for every 3.8 AHG Shares to one APE Share for every 3.6 AHG Shares, making the offer more attractive for AHG Shareholders.
Both the companies have entered into an implementation deed, under which the Directors of AHG have agreed to unanimously recommend the AHG shareholders to accept the Improved Offer, in the absence of a superior proposal, and that they should accept once AP Eagers waives the no MAC bid condition in the manner explained in the Implementation Deed.
In relation to the Improved Offer, AP Eagers is soon going to release its third supplementary bidder’s statement. Automotive Holdings is planning to seek relief from ASIC to delay dispatch of its target’s statement, including the independent expert’s report, to AHG shareholders so as to enable (among other things) the independent expert to properly consider the Improved Offer.
The improved offer will close on 16 September 2019 (7.00 PM – Sydney time).
As per the initial bidder statement, the merged group is facing the risk of evolving market and industry conditions, under which it is believed that the operations of the merged group may be impacted by changes in the market for new and used automotive vehicles, related parts and servicing requirements and other ancillary products and services. The merged group’s financial performance could be adversely affected by factors influencing the automotive industry.
Further, the operating and financial performance of the Merged Group is sensitive to the current state of, and future changes to, general economic conditions overall as well as any of the markets in which it operates.
A traditional automotive business model depends on the retention of existing relationships with motor vehicle manufacturers and development of new relationships in order to grow. There is no guarantee that the new merged group’s relationships will continue or if they do continue, that these relationships will be successful.
Further, there are risks that integration of the businesses of AP Eagers and AHG may take longer than expected and that the anticipated benefits of that integration may be less than estimated.
At the time of writing, i.e., on 8 May 2019 AEST 3:35 PM, the stock of the company was trading at a price of A$2.380, down 0.833% during the day’s trade with the market capitalisation of ~A$795.9 Mn. In the last six months, the share price of Automotive Holdings increased by 20.91% as on 7 May 2019. It has a 52 weeks high price of $3.470 and 52-weeks low price of $1.390 with an average volume of ~1,687,946.
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