ELMO (ASX:ELO) announces scheme booklet dispatch, shares up

December 23, 2022 02:08 PM AEDT | By Tamnna

ELMO (ASX:ELO) announces scheme booklet dispatch, shares up — Image source: © BiancoBlue | Megapixl.com

Details of ELMO acquisition by Cookie Monster

It all started back on 26 October 2022 when ELMO entered a SID with Manhattan Bondi HoldCo, Inc. (BidCo), which is a wholly owned subsidiary of funds advised by K1 Investment Management. As per the scheme terms, K1 will acquire 100% of the shares in ELMO for a cash price of AU$4.85 per ELO. The provisions of the scheme are dependent upon the fulfilment or waiver of all applicable requirements and the implementation of the scheme.

According to ELMO's official ASX report, Danny Lessem, the company's CEO and co-founder, has teamed up with K1 to try to put the scheme into effect through a cooperation voting and rollover agreement. In accordance with that cooperation agreement, Mr Lessem has consented to transfer about 70% of the ELMO shares he currently owns into the private K1 vehicle rather than receiving cash for them.

ELMO’s independent board committee (IBC), which handles any private proposals and contacts possibly interested counterparties as needed, believes that this scheme is in the best interests of ELMO shareholders based upon the following reasons:

Considerable premium: The scheme consideration reflects a premium of over 100% to ELMO's closing share price of AU$2.42 on Wednesday, 12 October 2022 (the undisturbed date) and a premium of 95% to ELMO's 1-month VWAP of AU$2.49 on the same day.
Value certainty: The 100% cash consideration gives ELMO shareholders a chance to realise the entire value of their investment in cash.
Limited conditionality: The plan is not subject to funding or due diligence but is subject to FIRB approval and other restrictions typical for transactions of this kind.

On 16 December 2022, New South Wales supreme court approved the convening of scheme meetings and the despatch of the scheme booklet. On the same day, ELMO also registered the scheme booklet with the Australian Securities and Investment Commission (ASIC).

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