This article is from the Australian Property Journal archive
LISTED food franchisor Retail Food Group has launched a rival takeover bid for Oaks Hotels & Resorts, going up against Delicious Food Holdings, which is owned by Thai-based hospitality group Minor International.
RFG is the intellectual property owner and manager of Donut King, Michel’s Patisserie, Brumby’s Bakeries, bb’s cafe and Esquires franchise systems.
RFG has made a takeover offer of $0.545 for each Oaks share or a cash payment of $2.60 and one RFG share for every 10 Oaks shares, valuing the company at $94.7 million.
The $0.545 price represents a 12% premium to the 20 day volume weighted average price of Oaks shares of $0.49 and 35% premium to the 3 month volume weighted average price of Oaks shares of $0.40.
It is also a 5% premium to Minor’s revised offer price of $0.52.
However the RPG’s offer is banking on the fact that the Australian and Securities and Investments Commission will not give Minor the permission to buy 34% of the shares in Oaks from the receivers and managers PricewaterhouseCoopers following a tender process, which Minor was the higher bidder.
Oaks had hoped another party would have outbid Minor for the shares held by PwC.
If ASIC gives Minor the go ahead, Minor’s interest in Oaks will jump from 19.9% to 54.3%, which will effectively block RPG’s bid.
Yesterday Oaks directors Doug Wong, Stephen Lonie and Mark Gray have recommended shareholders accept the RPG bid and they intend to accept the offer for their own holdings of Oaks shares.
Oaks directors John Cowley and Colin Archer are both directors of RFG.
“RFG anticipates the Oaks acquisition on a core operations basis and over a full year to be earnings per share (EPS) accretive in the range of 15% to 25% once identified integration synergies are realised,” RFG CEO Tony Alford said.
“The Oaks business model will align and benefit from the proven expertise of RFG’s systems, management, property and marketing functions.
“The Oaks business is poised for reinvigoration and its amalgamation with RFG’s existing franchise system, further diversifies RFG’s revenues and remains consistent with its broad focus on property, leasing, and management of third party stakeholder relationships and interests. Indeed RFG perceives an opportunity in the immediate term to capitalise on its franchising expertise for the benefit of the Oaks business model via the introduction of franchising relationships,” he added.
Oaks chairman Doug Wong said despite Minor last week indicating that it will increase its offer price from the original $0.35 to $0.52 per share, the board continued to believe this did not adequately reflect the value of Oaks.
Australian Property Journal
