Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.Launch Radio player
Dorchester Pacific [NZX: DPC] plans to offer $3 a share in cash, shares and notes for Turners Auctions, valuing the auction company at $82 million, after winning support from chairman and major shareholder Michael Dossor.
The offer would amount to a 9.1 percent premium on the most recent trading price of Turners of $2.75 and Dorchester said it would also require Turners to pay a fully-imputed special dividend of 15 cents a share once it has acceptances that would give it more than 50 percent of the company. Dorchester currently owns 19.85 percent of Turners while the target company's chairman owns 20.8 percent through Bartel Holdings, for a combined 40.65 percent stake.
Dorchester said it will offer either $3 a share cash, two-year notes that pay interest of 9 percent and convert to Dorchester shares. ordinary shares of Dorchester or any combination. Bartel, which has entered a lock-up agreement with Dorchester, has agreed to accept 60 percent ordinary shares and 40 percent convertible notes, the finance company said.
Dorchester said the takeover was conditional only on achieving at least the 50.1 percent control required under the Takeovers Code.
"There is a natural alignment and synergy between Dorchester and Turners Auctions, which we talked about at the time of our investment in Turners," Dorchester chief executive Paul Byrnes said. "Seventy percent of our finance lending is for motor vehicles and our insurance business has a focus on motor vehicle related insurance products."
Turners stock was put in a trading halt. Dorchester rose 4.6 percent to 23 cents and is little changed this year.
Dorchester expects to raise between $25 million and $27.5 million by selling shares at 25 cents a piece to Turners stockholders including Bartel and via a placement, it said. It also expects to issue about $15 million of convertible notes to Bartel and other parties, it said. Final details would depend on what combination of cash and securities that Turners' shareholders accepted.
Dorchester plans to make a formal takeover offer in August, with resolutions relating to the proposal put to the company's annual meeting.
A successful takeover may lift Dorchester's 2016 pretax earnings to between $20 million to $25 million, from a forecast $10 million to $11 million forecast for the current year from existing businesses, it said.
Dorchester chairman Grant Baker said after the transaction, its balance sheet "will still remain relatively conservative," giving the company room to pursue further acquisitions.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- HSBC economist says no housing bubble in Auckland
- Snag for Lightbox, Quickflix as Google pulls support for their video format
- Alex Swney pleads guilty to a further $2.5 million fraud
- Readers invest in Ross investors' superannuation claim
- Mitac folds Navman Technology NZ assets into Australian affiliate