Westoz (ASX:WIC) share price surges 9% on ASX WAM merger

Westoz is joining a bigger tribe…

The Westoz Investment Company Limited (ASX: WIC) share price is on fire today. Westoz shares are currently trading at $1.29 each, up a pleasing 8.86% at the time of writing. Since the S&P/ASX 200 Index (ASX: XJO) is 'only' up 0.23% at the same time, this is a marked outperformance from Westoz shares. This is especially notable, because, before today, Westoz shares had actually gone backwards over 2021 thus far, falling by 0.84%. Now, their year to date return stands at a far healthier 8%. 

So what's going on here?

Well, this rise appears to be the result of a big announcement out this morning regarding Westoz.

Three excited business people cheer around a laptop in the office

Image source: Getty Images

Westoz to be acquired by WAM Capital

WAM Capital Limited (ASX: WAM), the giant Listed Investment Company (LIC), has announced this morning that it has entered into an arrangement to acquire Westoz in full. Under the arrangement, WAM Capital will acquire all shares of Westox that it doesn't already own. In exchange, shareholders will receive 0.652 shares in WAM Capital. This makes this deal an all-scrip one. That gives the offer a value of roughly $1.447 for every Westox share. So no wonder Westoz is rocketing towards that level today.

Westoz' board has said that the offer will be subject to "independent expert determining that the Proposed Transaction is in the best interests of Westoz shareholders". However, the board also said that " in the absence of a superior proposal, the Westoz Board of Directors believe the Proposed Transaction is in the best Interests of Westoz shareholders and intend to vote their own Westoz shares in favour of the Proposed Transaction".

Here's what Westoz chair Jay Hughes had to say on this deal:

An investment in WAM Capital through the Proposed Transaction offers our shareholders greater liquidity and a more favourable alignment between market price and underlying asset value for their holdings. WAM Capital also offers a similarly successful track record of underlying portfolio performance.

Westoz shareholders will be able to vote on this proposed marriage next April, with a proposed date of 21 April for implementation.

But this isn't the only deal WAM Capital has announced today. This $2 billion LIC has also announced that it also intends to acquire Ozgrowth Limited (ASX: OZG) as well. Ozgrowth is another LIC, and WAM is also proposing to pay for the acquisition with the issuance of new shares.

A big day for shareholders of WAM Capital, Ozgrowth and Westoz, indeed!

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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