WAM Capital Limited (ASX: WAM) has announced a takeover bid for Amaysim Australia Ltd (ASX: AYS), sending its shares higher.
WAM Capital is a listed investment company (LIC) and Amaysim is, or was, a utilities business that owned Click Energy and a telecommunications company.
Amaysim recently decided to sell its mobile business to Optus for $250 million.
Here’s the offer
WAM Capital is offering either: one new WAM Capital share for every 2.7 Amaysim shares, representing a value of $0.833, or $0.695 cash per Amaysim share. or a combination of shares and cash.
However, the offer will be subject to a limited number of conditions including shareholder approval of the sale of Amaysim’s mobile business to Optus under the mobile sale and a number of other customary conditions including no regulatory action and no material adverse changes.
Why would WAM do this?
This is quite removed from the typical strategy of a LIC to take up a (relatively small) position in listed businesses. Buying a whole business is very different. This isn’t the first time WAM has tried to buy a business – in the past it tried a business called Moho Resources which, at the time, had a large pile of cash.
But it’s not as though WAM Capital wants to take over the operation of Amaysim’s telecommunications business – one of the conditions for WAM’s offer is that the Optus purchase goes through.
WAM said that it approached Amaysim about this offer after the announcement of the sale of the telecommunications division, the planned distribution of all the remaining cash to Amaysim shareholders as well as the planned wind up and delisting of the company.
The shares offered by WAM would allow WAM shareholders to benefit because those shares would be issued at a premium to the underlying value net tangible assets (NTA) per share, which would add to WAM’s pre-tax NTA.
WAM explained that the Amaysim business, after the mobile sale, is represented largely by the underlying cash distribution available to Amaysim shareholders including a significant fully franked component to the distribution of approximately $80.7 million which is expected to be paid in April 2021.
Amaysim’s board supports the deal, so unless a bigger offer comes in I think it’s going to go through. It’ll be interesting to see if WAM Capital tries to make other deals like this happen in the future.
