Perth based, chocolate manufacturer Yowie Group Limited (ASX: YOW) today announced, that it had received an off-market takeover bid from Keybridge Capital Limited (ASX: KBC) for a consideration of 9.2 cents.
The Bid price of 9.2 cents per share is at a premium of 31.4% to YOW’s Tuesday’s (12 March 2019) closing price of 7 cents. Further, the Bid considerations would be paid in cash or a combination of cash and KBC’s notes (ASX: KBCPA). The combination of notes and cash would be dependent upon the two scenarios as mentioned by the company:
Scenario 1- If KBC receives acceptances below the Bid up to a cost of $ 9 million, then all Yowie shareholders who have accepted will receive 100% cash consideration. This means, no Notes would be used as Bid consideration until Keybridge reaches a relevant interest of 51% of YOW’s current issued capital.
Scenario 2- If KBC receives acceptances under the Bid in excess of a cost of $9 million, then the excess Bid consideration will be satisfied by the issue of new Notes. Under this scenario, accepting YOW, shareholders would receive cash and Notes on a proportionate basis based on their YOW shareholdings. KBC would apply for quotation on ASX of all new Notes issued to YOW shareholders.
Keybridge notes have a yield of ~9.7& pa (after grossing up for franking credits) based on their face value of $1.00. KBC currently holds 6.051% shares in Yowie, and has a relevant interest in a further, 12.182% shares of Yowie held by Aurora Funds Management Ltd.
Keybridge believes that Yowie management has failed to operate the business in a profitable manner, and Yowie has incurred significant losses in the ordinary course of its business. Hence, Keybridge intends to increase its stake in Yowie to an extent, where it can induce material influence via making changes in the Yowie Board and maximise Yowie’s available assets. The company release also stated that KBC does not propose to make an offer for the outstanding options and service rights issued by Yowie.
The take over bid is subject to certain conditions, and these include cash and liability balances of Yowie and no litigation, no material adverse change statutory ‘prescribed occurrences’ occurring, in relation to Yowie before the end of the offer period. KBC may not proceed with the Bid, if their conditions stated are not met.
In its latest release to its shareholders, Yowie Board has requested the shareholders to reject the bid offer from KBC, as the board believes the approach to take over by KBC to be opportunistic and the Board also believes that the bid price of 9.2 cents undervalues Yowie’s business.
The stock YOW has been in a downtrend in the past five years. The stock has delivered a negative 90.67% returns in the past five years (As of 12 March 2019).
The shares of YOW closed at A$ 0.085 on ASX, (As at Wed 13 Mar) up by 21.429% as compared to previous day closing price of A$0.007.
The shares of KBC closed the day at A$0.054 and was up by 8% as compared to previous days close. The share price has been in a downtrend. The stock has delivered a negative 43.82% returns in the past six months and negative 28.57% in the past three months.
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