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Highlights
- Stock Jump: Midway Ltd shares rise over 60% after news of acquisition bid from RCM BidCo.
- Cash Offer: Shareholders are set to receive AU$1.19 per share, including a special dividend.
- Board and Major Shareholder Support: Board and largest shareholder, Chebmont, endorse the bid.
Shares in Australian wood fibre processor and exporter Midway Ltd (ASX:MWY) surged today following the company’s announcement of an acquisition proposal. After closing at 76.5 cents yesterday, Midway shares opened sharply higher, reaching AU$1.275 in early morning trade, marking a 66.7% increase. While the price has since adjusted slightly, shares remain strong at AU$1.25, reflecting a 63.4% rise.
In contrast, the S&P/ASX Small Ordinaries Index (ASX:XSO) held steady, highlighting the sharp, independent move in Midway’s stock driven by the acquisition news.
Acquisition Details
The surge in Midway’s share price came after the company disclosed it had entered a binding Scheme Implementation Deed (SID) with RCM BidCo, an acquisition entity owned by River Capital-managed funds. The proposed deal would see RCM BidCo acquire all outstanding shares of Midway through a scheme of arrangement, offering shareholders AU$1.19 in cash per share. This offer includes a partially franked special dividend of 38 cents per share, making it an attractive bid for current shareholders.
The proposed acquisition values Midway’s equity at approximately AU$104 million, a significant premium over recent trading levels. The Midway board, viewing the offer as beneficial for shareholders, has unanimously recommended voting in favor of the scheme, provided there is no superior proposal. The board’s support is contingent on an independent expert’s review confirming the deal aligns with shareholders' best interests.
Major Shareholder Support
Adding to the momentum, Midway’s largest shareholder, Chebmont, which holds or controls around 23.8% of Midway’s shares, has committed to voting in favor of the scheme. Chebmont’s endorsement of the offer adds a layer of stability to the proposal, likely improving the chances of a successful shareholder vote.
Market Reaction
The acquisition proposal has driven substantial investor interest, pushing Midway’s share price up by more than 60% in early trading. The sharp price movement underscores the positive sentiment surrounding the acquisition and reflects investor confidence in the potential for a successful deal completion.
With backing from the board and Chebmont, the acquisition bid appears to have strong support, but the transaction remains subject to shareholder approval and regulatory processes. Midway shareholders now await further developments and the anticipated review from an independent expert.
