This article is from the Australian Property Journal archive
CHILDCARE centre operator G8 Education has lifted its interest in rival Affinity Education to 19.89% from 16.41%, as Affinity goes on the offensive.
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Late last week G8 made a $162 million takeover bid for Affinity by offering one fully paid ordinary share in G8 for every 4.61 fully paid ordinary shares in Affinity, valuing the company at 0.70 cents per share.
Affinity yesterday announced that it has appointed Luminis Partners and Corrs Chambers Westgarth to evaluate the bid, after accusing G8 of making an opportunistic bid.
Affinity CEO Justin Laboo revealed that G8 is willing to pay a higher price of $1.105 per share and that the current offer of 70 cents per share undervalues the company.
He said the Affinity board had received an approach from G8 wishing to discuss an indicative merger proposal in April and the chairs and managing directors of G8 and Affinity met on 24 April to discuss a potential proposal that G8 wished to advance.
“At that meeting, G8 proposed a nil premium merger between G8 and Affinity (based on the closing price of Affinity and G8 shares on 23 April 2015, this would have involved an equivalent value for each Affinity share of around $1.105). Affinity advised G8 that it would consider the proposal.
“The chairs and managing directors of G8 and Affinity agreed to meet again on 24 June 2015. At that meeting, G8 again proposed a nil premium merger between G8 and Affinity, with Affinity shareholders receiving consideration of G8 shares at a ratio based on the market price of Affinity shares on a spot or 30 day VWAP basis. Based on the closing price of Affinity and G8 shares on 23 June 2015, this would have involved an equivalent value for each Affinity share of around $0.825,” Lebbo said.
“Affinity advised G8 that the previous proposal was not acceptable based on (among other things) the Affinity board’s view that an $0.825 offer undervalued Affinity.
“G8 advised that it would respond to Affinity within 10 days before 4 July 201. Before the announcement on 3 July 2015, Affinity had not received any further proposal from G8,” he added.
“At the time of discussions relating to the previous proposal, Affinity agreed to keep these discussions confidential. However, in light of the subsequent unsolicited announcement of the highly conditional current proposal, Affinity considers that, in advance of its detailed advice in its target statement, it is important that shareholders are aware that G8 was very recently prepared to offer a higher value for Affinity shares which the Affinity board had considered was inadequate.
“This makes it clear that G8’s share acquisitions and the current proposal are highly opportunistic,” Lebbo said.
Lebbo said the company has also raised concerns with the corporate regulator ASIC over G8`s tactics in acquiring a large interest in Affinity.
“Affinity is concerned to ensure that the acquisition of Affinity shares by G8 takes place in an efficient, competitive and informed market. Affinity will raise its concerns with the regulator (ASIC),” he said.
Australian Property Journal
