WAM (ASX:WAM) share price unmoved despite victory in PAF acquisition fight

It seems investors are unnmoved by the listed investment company's takeover success.

| More on:
A man sitting at his desktop computer leans forward onto his elbows and yawns while he rubs his eyes as though he is very tired.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Listed investment company (LIC) WAM Capital Limited (ASX: WAM) has won the battle to acquire fellow LIC PM Capital Asian Opportunities Fund (ASX: PAF), confirmed in an announcement today.

WAM's success comes after PAF's largest shareholder, PM Capital Global Opportunities Fund Ltd (ASX: PGF), reluctantly accepted its revised offer.

Despite the victory, shares in WAM Capital are flat in today's session, currently trading at $2.24 apiece.

The win follows a long saga that played out across 2021 and saw several speed bumps along the way, prompting WAM to increase its offer back in September last year.

Here are the details.

WAM to finally acquire PAF

In December 2021, PAF issued a supplementary target statement recommending its shareholders accept WAM's revised offer.

Just prior to this, on 13 December, PAF shareholders rejected the scheme. Today's update is a victory for WAM that now controls the $64 million LIC by market capitalisation.

Yesterday, WAM announced an increase in the consideration provided under its offer of 1 WAM share for every 1.95 PAF shares held. This upped the offer from every 1.99 PAF shares held.

According to a previous update, WAM noted the revised offer signified a 3.5% premium to the closing price of PAF shares on 11 January and an 18.4% premium to PAF's closing price before the scheme was announced.

In a release today, PM Capital says that it is "disappointed that the Scheme of Arrangement that it had proposed for PAF did not proceed".

The fellow LIC reluctantly accepted the offer. However, it noted the updated offer "provides PGF with the ability to exit its investment at a solid premium to [net tangible assets] NTA to the benefit of all PGF shareholders".

What's next?

Now the offer is concrete, the "governance protocols" that were established in connection with the scheme have come to an end.

Under the offer, the directors will have them moved to PGF's custodial account – which is under the control, and day-to-day management, of PGF's Investment Manager, according to the release.

Now the deal is complete, WAM's voting power in PAF will increase to 69.07%, up from 36.08% previously.

However, it seems investors have been largely unmoved by WAM's success today. It's surprising considering the takeover accounted for much of the LIC's news in 2021.

At present, WAM shares are trading sideways and are flat on the day. Also, the volume of shares traded today is just 20% of the company's 4-week average with a paltry 141,254 shares changing hands at the time of writing.

The WAM share price is also flat on its previous 12 months of trading and has climbed less than 1% in the past month.

The author has no positions 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.

More on Mergers & Acquisitions

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Mergers & Acquisitions

APM share price placed on ice as $1.8 billion deal goes dud

It's all question marks and raised eyebrows for shareholders of this ASX company today.

Read more »

Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price
Mergers & Acquisitions

Could Star Entertainment shares be next in line to catch a takeover bid?

Star shares have been battered, but could a buyout be coming?

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

Man pointing at a blue rising share price graph.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 10% on a $985 million cash bid!

Investors are piling into the ASX 300 stock on the back of a $985 million cash takeover bid.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Mergers & Acquisitions

Guess which ASX blue-chip share is throwing $202 million at another acquisition

This Aussie healthcare company is growing its presence in Switzerland.

Read more »

A man stands with his arms crossed in an X shape.
Mergers & Acquisitions

Boral share price falls after rejecting Seven Group takeover

The offer 'undervalues' Boral according to its committee.

Read more »

Miner looking at a tablet.
Materials Shares

Mineral Resources share price marching higher on new lithium project acquisition

ASX 200 investors are bidding up the Mineral Resources share price on Monday.

Read more »

A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.
Technology Shares

Appen shares plunges 17% after takeover collapse

Well that didn't take long...

Read more »