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

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.

Should you invest $1,000 in WAM Capital right now?

Before you consider WAM Capital, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and WAM Capital wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

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

Two men in a bar looking uncertain as they hold a betting slip and watch TV.
Mergers & Acquisitions

Here’s why the Tabcorp share price is lifting on Wednesday

The gambling entertainment company has started the day in the green.

Read more »

businessman takes off with rockets under feet
Mergers & Acquisitions

Boom! Here’s why the Havilah Resources share price just exploded 165%

A potential $205 million acquisition has got the market excited over this metals explorer.

Read more »

a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the IAG share price continue to fall
Mergers & Acquisitions

Brambles share price sinks 7% after takeover talks collapse

Brambles shares are in reverse on Tuesday after takeover talks collapsed...

Read more »

A woman pulls devil rock'n'roll hands and sticks her tongue out whilst headbanging, she's rocking it.
Mergers & Acquisitions

Here’s why the Brambles share price is rocketing 11% on Monday

The company confirmed it's in takeover talks this morning.

Read more »

Rocket powering up and symbolising a rising share price.
Mergers & Acquisitions

Infomedia share price rockets 30% following takeover approach

Infomedia shares are rocketing after receiving a takeover approach...

Read more »

A man in a suit looks surprised as he looks through binoculars.
Mergers & Acquisitions

Brambles share price on watch as takeover talks confirmed

The ASX 200 pallet maker could soon face a $20 billion takeover bid.

Read more »

an attractive woman gives a time out signal with her hands, holding them in a T shape, indicating a trading halt.
Mergers & Acquisitions

Infomedia share price halted amid takeover approach

Infomedia is a takeover target

Read more »

a woman drawing image on wall of big fish about to eat a small fish
Bank Shares

NAB share price lifts amid Suncorp rumours

NAB shares are up amid acquisition rumours.

Read more »