A.P. Eagers Limited, a leader in the automotive retail industry, is in discussions with Automotive Holdings Group Limited (ASX: AHG) to acquire all the ordinary shares in AHG that are not already owned by it.
A.P. Eagers has already announced an off-market takeover bid for the proposed acquisition.
Today, Automotive Holdings Group Limited has provided a notice of change of interests under institutional acceptance facility and change of interests of substantial holder. As per the notice, since 13 May 2019, the aggregate number of AHG Shares which are held subject to the Acceptance Facility as at 7.00 PM 17 May 2019 and in which AP Eagers has a relevant interest has changed from 54.0554% to 55.2512%.
Source: Company Reports
Earlier on 8 May 2019, AHG had announced that AP Eagers has improved its offer to acquire all the shares in AHG that it does not already own, so that the consideration offered is now 1 APE Share for every 3.6 AHG Shares that you hold.
AHG Directors have carefully considered the Improved Offer and according to them this offer is in the best interests of AHG Shareholders. Therefore they have recommended the shareholders to accept AP Eagers’ Improved Offer.
The key reasons for the Directors’ Recommendation are as follows:
- There are benefits of being a shareholder in a larger, more diverse Merged Group.
- Further, there is an opportunity to benefit from the potentially significant synergies that could be realised from a combination of AHG and AP Eagers.
- The Directors believes that the Improved Offer provides AHG Shareholders with a better outcome than the Initial Offer.
- The AHG Share price may fall below current levels if the Improved Offer does not proceed and no superior proposal emerges.
- AP Eagers already has a relevant interest in 31.23% of the AHG Shares on issue and several large AHG Shareholders (holding approximately 22.82% of the AHG Shares on issue) have already signalled their support for a combination of AHG and AP Eagers by accepting into the Institutional Acceptance Facility.
- The Independent Expert has concluded that, whilst not fair, the Improved Offer is reasonable to AHG Shareholders who are not associated with AP Eagers.
If AP Eagers successfully acquires 100% of the AHG Shares that it does not already own, AHG Shareholders would benefit from the cost savings and synergy benefits which are expected to accrue to the Merged Group. These benefits would only arise on a combination of AHG and AP Eagers; they are not realisable by either party in isolation and arise due to the scale of the Merged Group and the ability to remove certain costs currently incurred.
At the time of writing, i.e., on 20 May 2019, the stock of the company was trading at a price of A$2.530, up 8.12% during the day’s trade with the market capitalisation of ~A$776 Mn.
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