The finish line is getting closer with SAI Global announcing that it holds 49.38 per cent of voting power in Espreon, the business services company it has made an all-scrip offer for.
SAI will announce today either an extension of the offer or the status of their conditions, revealing whether they will use an alleged breach in their bid conditions to scupper the deal.
The breach was an ACCC investigation into the proposed acquisition started on January 14. Although it has been going on for over a month now, SAI only made note of the breach on Wednesday (see Hopes dashed by SAI, February 18).
If the breach is declared, SAI can either walk away or cancel a sweetener of offering one SAI share for every 4.4 Espreon shares.
However, SAI is unlikely to walk because based on the company's closing price yesterday the value of their scrip offer is less than the lower end of Espreon's 48.5 cents a share valuation, according to independent experts Lonergan Edwards & Associates.
It appears then, that SAI may enter hard-ball phase. Originally the company was seen as something of a white knight for Espreon, fighting off a hostile bid from former competitor Vectis, a private company owned by Melbourne businessmen Alan Schwartz and Jacob Weinmann. However, Espreon shareholders are now likely to rue the day they refused Vectis's original offer of 65 cents a share in June of last year.
SAI is being advised by Macquarie Capital and lawyers Gilbert + Tobin. Advising Espreon are TC Corporate and Baker & McKenzie on the legals. Vectis is being advised by Grant Samuel and Mallesons Stephen Jaques.
Business Spectator
After announcing it had crossed the 50.1 per cent threshold in its takeover of business services provider Espreon, SAI Global has redeclared its offer as unconditional – allowing Espreon shareholders a great sigh of relief.
SAI said on February 18 that an ongoing ACCC merger investigation could constitute a breach of its terms (Hopes dashed by SAI, February 18), causing consternation once again for Espreon investors who have repeatedly seen their hopes for a positive shareholder exit dashed.
Since mid last year Espreon has knocked back a series of increasingly smaller offers. Former competitor Vectis initially offered Espreon shareholders 65 cents a share in cash in June. SAI is making an all-scrip offer of one SAI share for every 4.8 Espreon shares, effectively valuing the target at 48.96 cents per share. SAI's offer increases to one for 4.4 shares if it comes to own 90 per cent of Espreon.
The outcomes of the ACCC investigation, which begun on January 14, will be announced on February 25 and, hopefully for Espreon, will constitute the last major hurdle to the deal.
SAI is being advised by Macquarie Capital and lawyers Gilbert + Tobin. Advising Espreon are TC Corporate and Baker & McKenzie on the legals. Vectis is being advised by Grant Samuel and Mallesons Stephen Jaques.
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