Private equity giant Citic Capital China Partners is making a bid for Trilogy International, offering $2.90 a share for the candle and skincare company.
Trilogy’s board say depending on an independent apprasial report they intend to unanimously recommend shareholders to vote for the deal, which is structured as a Scheme of Arrangement.
The Business Bakery, Trilogy’s largest shareholder, intends voting its 31.2% in favour of the takeover.
The offer price represents a premium of 27.8% to Trilogy’s closing share price yesterday of $2.27 and a 28.1% premium to the three month volume weighted average share price as at 14 December 2017.
However, Trilogy shares have fallen 22.8% in the past 12 months.
The offer price values Trilogy at approximately $250 million on a total enterprise valuation.
Citic senior managing director Hanxi Zhao says Citic sees potential to boost Trilogy's global growth. She says they intend retaining Trilogy's Auckland head office and senior management team including CEO Angela Buglass. Director Stephen Sinclair of The Business Bakery will be retained as a consultant following the transaction.
The proposal is conditional on the approval of Trilogy's shareholders, the High Court and the New Zealand Overseas Investment Office.
Trilogy chairman Grant Baker says the Scheme proposal provides certainty regarding the value of the shares.
“The Board remains confident that TIL is well positioned to deliver growth in earnings across each of its four businesses in the long term. Delivering this growth will take time and involves execution risks. Therefore, shareholders may find attractive the opportunity to realise the value of their TIL shares in cash now.”
"Citic Capital is viewed as a good owner of TIL as it moves into its next phase of growth. In particular, Citic Capital's strong relationships in the Asian and US markets provide an opportunity to unlock the potential of these brands, and achieve faster growth globally," Mr Baker says.
A scheme of arrangement is a court-approved process which requires Trilogy to obtain approval from shareholders at a special meeting, with 75 percent of all votes casts in favour and at least 50 percent of the total voting rights cast.
In October, Citic boosted its stake in NZX-listed Tourism Holdings to almost 11 percent having emerged as a substantial shareholder in the motorhome operator earlier that month.
Trilogy shares peaked at $5 in August 2016. The stock was listed in 2010 under its Ecoya scented candle moniker, selling shares at $1 apiece to raise about $10 million. It jumped 21 percent to $2.75 when the NZX opened today, valuing the company at $200 million.
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