Australian factoring company Scottish Pacific has inked a ~$630 million takeover with Asian private equity firm, Affinity Equity Partners.
Today, 24 September 2018, Scottish Pacific Group Limited announced that it has entered into a scheme implementation agreement with SME Capital Investments III Pty Ltd, an equity owned by fund manager Affinity Equity Partners, under which latter would acquire 100% of Scottish Pacific Group Limited in exchange of all cash consideration which values Scottish Pacific’s equity at close to $630 million.
This comes after the months of secret talks between Scottish Pacific Group and Affinity Equity Partners along with their advisers; as any leak about the deal would have become a bottleneck for a bidder to secure the deal in the highly competitive market of private equity.
If the scheme implementation goes through, SCO Shareholders will receive $4.40 per share in cash which represents a premium of 27.8% SCO’s 1?month volume weighted average price to 19 September 2018 of $3.44. However, on the part of the bidder the cash consideration of the transaction is said to be fully funded.
The deal will be placed to Scottish Pacific’s shareholders in a meeting that is due to be held on 30 November 2018. The final close to the transaction reportedly depends upon the approval of SCO’s shareholders and the other obligations conditions attached to the scheme, expected to be completed by December 2018. Further, a failure in the implementation of the scheme under certain circumstances has been protected by the break fee payable by the bidder to SCO or vice versa, as the case may be.
The Board of Directors of Scottish Pacific Group have signaled their approval to the scheme and have also made a unanimous recommendation to SCO’s shareholders to vote in favor of the Scheme. However, their recommendation is said to be backed by the absence of any superior offer and the conclusion drawn by Independent Expert which reads that Scheme is in the best interests of SCO shareholders.
SCO’s Chairman, Patrick Elliott, commented “Affinity Equity Partners’ proposal represents a significant premium to SCO’s recent share price, and entitles all SCO shareholders to receive up to 100% of the Scheme Consideration in cash which provides value certainty for shareholders. We believe the proposal is consistent with the Board’s efforts to maximize shareholder value.”
Scottish Pacific is advised by PwC and Citi while Affinity was supported by Macquarie Capital and King & Wood Mallesons. Scottish Pacific Group said that the comprehensive detail of the takeover transaction including Independent Expert’s report will be provided to its shareholders in early November 2018.
Affinity Equity Partners has recently secured a fund raising of US$6 billion and is expected to utilize the SCO’s debtor finance platform to explore opportunities in other financial services sub-sector.
On the news of Scheme implementation agreement with Affinity Equity Partners, Scottish Pacific Group’s share price soared 15.24% or $0.57 to $4.310 on 24 September 2018 (1:37 PM AEST). The stock has seen a performance change of +33.10% over the past one year. It is currently trading at a PE of 15.620 x with market capitalization of $520.58 million.
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