It seems as though the Automotive Holdings Group Ltd (ASX: AHG) and AP Eagers Ltd (ASX: APE) merger is going to go ahead.
A.P. Eagers is Australia’s oldest listed automotive retail group, it has been going for over a century. It operates automotive dealerships across Queensland, South Australia, New South Wales, Victoria, Northern Territory and Tasmania. It has over 4,500 employees.
The Merger Is Racing Ahead
AP Eagers has come forward with an improved offer (compared to the original one several weeks) to acquire all of the AHG shares it doesn’t already own.
The new offer is for 1 AP Eagers share for every 3.6 AHG shares owned, the prior offer was 1 AP Eager share for every 3.8 AHG shares.
Accepting AHG shareholders will also participate in any dividends approved by the AP Eagers Board and announced to the ASX after today and before the end of the offer period of AP Eager shares received by them as a consequence of their acceptance.
AP Eagers also said it would drop the ‘general market fall’ bid condition and will also waive the ‘no material adverse change’ (MAC) conditions once the ACCC has given its merger authorisation.
Consequently, the AHG Board has unanimously recommended that AHG shareholders accept this approved offer, assuming a better offer doesn’t come forward and should accept once AP Eagers drops the no MAC bid condition.
The Boards of AHG and AP Eagers both believe there is strong merit for shareholders in participating in an enlarged merged business which would have a combined market capitalisation of $2.3 billion.
AP Eagers Chairman Tim Crommelin said: “We are delighted the AHG Board shares our view on the logic and benefits of bringing the two companies together to create Australia’s leading automotive group.”
The deal certainly makes sense, particularly because the pre-tax synergies between the two businesses are estimated to be $13.5 million if full ownership is achieved. However, I think there are better ideas for growth, such as the two ASX shares revealed in the free report below.
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