To establish a leading salary packaging and fleet management company, McMillan Shakespeare Limited (ASX: MMS) and Eclipx Group Limited (ASX: ECX) proposes to undergo a merger. McMillan Shakespeare Limited has offered $912million to takeover all shares in Eclipx by early 2019.
In an announcement dated 8 November 2018, the two fleet management provider’s MMS and Eclipx agreed to merge pursuant to a Scheme Implementation Agreement. As per the agreed terms of arrangement, Eclipx shareholders will receive a consideration of $2.851 per share. In the settlement of purchase consideration Eclipx shareholders are to receive 0.1414 MMS shares plus 46 cents cash for each Eclipx share held.
On the news of higher valued proposal compared to previous $2.52 per share offer proposed by SG Fleet in August, Eclipx share price sky rocketed 16.522% to close at $2.680 on 8 November 2018.
In the absence of better offer, the Board of Eclipx has unanimously recommended its shareholders to vote in favor of the offer. The independent expert report has also given its approval stating that the merger represents the best interests of the Eclipx shareholders.
After the completion of merger, existing MMS shareholders will own approximately 64 percent of the Combined Group while Eclipx shareholders will hold the remaining approximately 36 percent. The Board of combined group will reportedly consist of three current Eclipx Directors, MMS’ Mike Salisbury as a Chief Executive Officer and Managing Director of the Board, and MMS’ Mark Blackburn as Chief Financial Officer.
It is anticipated that a combine group will realize an approximately $50 million in EBITDA run-rate synergies per annum, expected to be completely realised in the third year following completion of the merger. Further, the merger is seen as an EPS accretive pre-synergy that is said to deliver an enhanced customers and material benefits and opportunities to employees, partners and key stakeholders.
MMS Chairman Tim Poole stated that McMillan Shakespeare is pleased to announce the merger of two industry leading businesses to create a unique, diversified and best-in-class platform.
Eclipx Chairman Kerry Roxburgh said Eclipx strongly believe that this merger represents a unique and compelling value creation proposition for both companies.
The completion of merger is expected to occur in early 2019, subject to satisfaction of certain regulatory and shareholders approval.
In today’s trading session, MMS share price nosedived 6.391% to close at $15.820 on 8 November 2018. However, the stock has seen a performance change of +4% over the past one year. PE ratio was 27.750 x with market capitalization of $1.41 billion.
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.