Scottish Pacific’s Shareholders Approved Takeover Bid By SME Capital

Scottish Pacific Scheme meeting results are out! Its shareholders have given a green card to the acquisition bid proposed by SME Capital Investments III Pty Ltd to acquire 100% of shares in Scottish. The news sent the Scottish Pacific shares witness a bullish trend in the market, currently it up 0.458% to stand at $4.390, as at 30 November 2018 (12:23 PM AEST).

In ASX announcement dated 30 November 2018, Scottish Pacific told that its shareholders have approved the scheme and the requisite majorities of shareholders have passed the due resolution. The scheme, Â announced on 24 September 2018, says that SME Capital will acquire all of the issued shares of Scottish Pacific at a consideration of $4.40 cash for per Scottish Pacific share, subject to regulatory approvals.

Scottish’ shareholders are also being given an alternative to receive consideration in share for 50% of their shareholding in Scottish Pacific and balance 50% in cash. It will include one share in SME Capital Holdings per Scottish Pacific share plus cash payment of $4.40 per SCO share. The consideration of $4.40 per share represents a premium of 27.8% to 1-month volume weighted average price to 19 September 2018 of $3.44, implying a fully diluted market capitalization for SCO of approximately $630 million.

But now that the company has received shareholders’ approval, what’s next?

To get the scheme legally effective, Scottish Pacific has to receive court orders approving the Scheme and lodge them with Australian Securities and Investments Commission (ASIC). These orders due to be received by Supreme Court of Victoria are scheduled for hearing on Friday, 7 December 2018. If Court approves the Scheme, Scottish Pacific shares will be suspended from trading with effect from close of trading on ASX on Friday, 7 December 2018. Date of payment of Scheme Consideration is scheduled to Tuesday, 18 December 2018.

During Fiscal 2018, the company achieved a strong growth of 8.2% in revenue ahead of 2.2% reduction in cost to income ratio. The statutory net profit before tax was $41.3 million in FY18, up 50% on FY17. It underscores the company’s future growth strategies that it has built during the year which includes migrating all customer administration onto a single platform, extending its product offering to its existing Debtor Finance customers through the company’s Specialised Finance team and building core internal capabilities in Customer Experience, Product Development and Treasury.

At the Scheme Meeting, Scottish Pacific’s Chief Executive Officer Mr. Peter Langham reaffirmed the company’s outlook for Fiscal 2019. Mr. Langham stated Scottish Pacific is guiding to low double digit profit growth as measured by NPATA.

Further going forward, the company targets to increase its investment in technology and launch new fintech products. Mr. Langham said Scottish Pacific is expanding with a focus on new products, such as Asset Finance, complementing the core Debtor Finance offering. He added that the company’s capability to provide facilities secured against assets other than just receivables will see new sources of income developed, particularly from FY19 onwards.

Over the past one year the stock of Scottish Pacific Group Limited (ASX:SCO) has witnessed a decent positive performance change of +34.05% while it its currently trading at a PE of 18.250 x with market capitalization of $608.27 million.

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