The WAM Capital Limited (ASX: WAM) share price is pushing higher on Wednesday.
In afternoon trade, the investment company’s shares are up 1% to $2.23.
Why is the WAM share price rising?
The catalyst for the rise in the WAM share price today could be news that its potential takeover of PM Capital Asian Opportunities Fund Ltd (ASX: PAF) was given a boost.
WAM is currently battling it out with PM Capital Global Opportunities Fund Ltd (ASX: PGF) for control of the fund.
In September, WAM made an off-market proposal to acquire the PM Capital Asian Opportunities Fund for one WAM Capital share for every 1.99 PAF share owned. Based on the WAM share price at the time, this implied an offer of ~$1.15 per share.
WAM believes this is superior to the offer that the PM Capital Global Opportunities Fund has made.
At the time of the offer, WAM’s Chairman, Geoff Wilson, commented: “WAM’s Offer to acquire 100% of PAF Shares on superior terms to the opposed Scheme provides a meaningful choice for PAF Shareholders and their investments.”
“Following acceptance of WAM’s superior proposal, PAF Shareholders have the option to remain a WAM Shareholder; or utilise WAM’s superior on-market liquidity to exit your position at a premium to net tangible asset (NTA) backing. The Offer allows PAF Shareholders to exit their PAF Shares by acquiring 1 WAM Share for every 1.99 PAF Shares held,” he added.
However, the PM Capital Asian Opportunities Fund’s Board didn’t see things that way and continued to recommend the offer from its Global Opportunities Fund. This led to WAM contacting the Takeovers Panel.
What’s the latest?
The good news for WAM is that its takeover bid was given a boost this week after the Takeovers Panel found PM Capital had breached the Corporations Act.
The Panel found that “holding notices given by PGF, PMC and the Moore Group contravened s671B.”
It also highlighted the acquisition of approximately 3.19% of PAF shares by associated entity Moore Group resulted in contraventions of s606(1), among other things.
Given that this isn’t a good look for a fund manager, WAM will no doubt be hoping this strengthens its offer and weakens PM Capital’s offer when it comes to voting next week. Though, it is worth noting that Paul Moore (and his associated entities) and PM Capital are seeking a review of the initial Panel’s decision.