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”.
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.