Miclyn Express Offshore gets private equity buyout offer

The $150 million takeover offer for Miclyn Express Offshore (ASX: MIO) was not a great surprise based on the recent activity of the two current major shareholders, which together own 75.2% of all outstanding shares.

CHAMP Marlin Holdings and SEA6 Holdings, parts of two private equity firms, began their move on the share registry earlier in April when they announced that they had made an acquisition of 8% of the outstanding shares from an offer to particular shareholders at an offer price of $2.20 per share. This is the same share price they are currently offering for the remaining approximate 25% they don’t own.

In the 2012 annual report, Macquarie Capital Group, the former investment banking group of Macquarie Group (ASX: MQG), was listed as the largest shareholder, at 33.17% of total outstanding shares. Generally, apart from some circumstances, an entity holding 20% or more of a company’s shareholdings would trigger ASIC’s rule that the shareholder must make a takeover offer of the company.

However, Miclyn Express Offshore is incorporated in Bermuda, and doesn’t require such action by major shareholders. In Sept 2012, CHAMP Private Equity acquired Macquarie Capital’s entire 33.2% stake in the company at $2.15 a share, plus an extra $0.10 per share if certain conditions were met.

With its affiliate, Headland Capital, which holds SEA6 Holdings, it had the board of directors restructured, and began its calculated move to increase its holdings.

Under Bermuda corporation law, majority shareholders can propose a merger or amalgamation to privatise the company, subject to a vote among shareholders only after the board approved of the proposal.

However, another option is that within four months after making a takeover offer, if the majority shareholding block can get acceptance of 90% of the remaining value of shares and 75% of the number of shareholders (not counting their holding block), they can make the privatisation compulsory.

The board has not given its acceptance to the offer yet, but the head of a group of minority shareholders, Michael Herskope, said that he was relieved that it wasn’t below $2.20 a share, though his group, which controls about 40% of the shares outside of the CHAMP-Headland block of shares, feels the offer should be higher.

Foolish takeaway

Miclyn Express Offshore provides service vessels to the oil and gas industry across South-East Asia, The Middle East and Australia. One of its Australian competitors is Mermaid Marine (ASX: MRM) which stands to benefit from this takeover bid.

If Miclyn Express Offshore does go private, investors who still want exposure to that industry sub-group may wish to buy into Mermaid Marine, or if they see more industry consolidation in the future, the company becomes a more attractive potential takeover target itself.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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