Turners seeks almost 20% of Motor Trade Finances to cement relationship
Turners [NZX: TNR], the company formerly known as Dorchester Pacific, is offering to lift its holding in Motor Trade Finances [NZDX: MTFHC] to almost 20% by buying shares at a premium, a move it says would reflect the business relationship between the two firms.
A cash offer of $1.15 a share will be sent to MTF shareholders on September 17, Turners said. The stock last traded on the ShareMart system on September 1 at 94c apiece and there are currently two offers to sell a combined 20,700 shares at that price.
"Turners currently write about 10% of new loans originated through MTF, with that percentage continuing to increase in recent months," said chief executive Paul Byrnes. "We are making this offer to enable us to increase our shareholding to better reflect our commitment to the MTF model. We expect our book to continue to grow. We would also like to think our expertise in the wider financial services and insurance industries could bring value to the business for the benefit of all shareholders."
The company currently holds 218,452 MTF shares, amounting to almost 1% of the stock. It would need support of the target's board to acquire a fifth of the company, because MTF's constitution has restrictions on holdings above 10%.
Turners has been on a buying spree since recapitalising in 2010. It agreed to acquire Southern Finance for $5 million in July, adding a South Island vehicle finance loan book, and has added businesses including Levin-based lender Oxford Finance and Greenwich Life Insurance. Last year it acquired Turners Auctions for $82 million in cash, scrip and bonds, and has changed its name to reflect its biggest purchase.
Mr Byrnes said Turners would not allow its holding to reach 20% or more and it was "quite relaxed about the final shareholding we finish up with." It didn't plan to raise its offer.
"We believe our offer provides an attractive opportunity for MTF shareholders who wish to sell their ordinary shares, given liquidity for those shares can be limited," he said.
Acquisitions helped Turners double profit in the 12 months ended March 31 to $18.1 million. Its shares last traded at 28c, valuing the company at $177 million. They have gained 155% in the past five years, outpacing a 76% advance in the S&P/NZX 50 Index.