Australia’s leading motoring group, Automotive Holdings Group Limited (ASX: AHG) is currently in discussions with A.P. Eagers Limited (APE) for a proposed merger and it has already received an offer by APE in which APE has offered to acquire all of the ordinary shares in Automotive Holdings that it does not already own by way of an off-market takeover bid.
APE is a leader in the automotive retail industry with has a clear growth strategy, stable management team and proven track record. APE today released a notice of change of interests under institutional acceptance facility in which it has announced that the number of ordinary shares in AHG in which it has an interest, as a percentage of AHG shares on issue, has now increased to 51.35% which is sending a strong signal to the AHG board about their support for a merger of the two businesses.
While commenting on the support from AHG shareholders, AP Eagers’ CEO Martin Ward told that moving beyond 50.1% so early in the offer period is representing a massive vote of confidence in the proposed merger.
APE believes that both companies will be stronger together under APE’s proven management expertise and track record of profitable growth which is why it has advised all of its fellow AHG shareholders to accept the offer so that the full benefits of the merger, particularly the synergies can be realised.
The commercial rationale for combining AP Eagers and AHG is underpinned by, enhanced brand portfolio diversification, greater geographical portfolio diversification, a larger, more flexible balance sheet and anticipated pre-tax cost synergies.
In addition, the Offer is expected to provide AHG Shareholders with the opportunity to benefit from exposure to AP Eagers’ proven management expertise that has delivered a consistent record of profit, dividend and earnings per share (EPS) growth over the long-term and it will also allow the shareholders to participate in the potential upside associated with AP Eagers’ future growth strategy.
For the six months to 31 December 2018, AHG reported Operating NPAT of $24.2 million and recorded a Statutory loss of $225.6 million. AHG believes that its Operating NPAT for FY 2019 will be in between $52?million to $56?million.
Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock has provided a year till date return of 57.89% & also posted returns of 32.60%, 48.61% & 35.98% over the past six months, three & one-month period respectively. At the time of writing, i.e., on 1 May 2019 AEST 2:58 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. It has a 52 weeks high of $3.520 and 52 weeks low of $1.390 with an average volume of 1,756,822.
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