Higher Bid Sees AP Eagers Lock Down Auto Holdings

The Automotive Holdings Group (AHG) board has unanimously recommended shareholders accept the AP Eagers’ (APE) improved scrip offer of one AP Eagers share for every 3.6 AHG shares. This compares to an earlier offer of one AP Eagers share for every 3.8 AHG shares.

“Reflecting a shared understanding of the changing industry dynamics and the potential impacts and opportunities for the respective businesses, the Boards of both AHG and AP Eagers believe there is strong merit for shareholders in participating in an enlarged, merged group,” AHG’s board said in yesterday’s statement.

The small improvement in the terms was sweetened by accepting AHG shareholders being allowed to participate in any dividends approved by the AP Eagers’ Board and announced to the ASX after today’s date and before the end of the offer period on APE Shares received by them as a consequence of their acceptance of the offer.

Seeing the closing offer of the bid is September 16, AHG shareholders accepting the APE offer from today should be able to participate in the interim dividend due to be announced on August 21.

Last year the interim was worth 14 cents a share but with the rapid slide in new car sales in recent months, APE will be under pressure to boost sales and higher earnings to accommodate a higher payout total for the first half of 2019.

So there’s every chance the payout per share will be lower because of the expected increase in the number of shares entitled to the interim.

APE revealed last week that more than 50% of AHG’s shareholders had accepted the offer – while that included the 28.85% APE held, it also included holdings of more than 22.5% in the institutional acceptance facility set up to allow shareholders to accept on a provisional basis, pending a possible higher offer.

Now that a slightly improved offer has been revealed, the deal is done and dusted.

The two companies have now entered an implementation deed.

Once the merger with a paper value of $2.3 billion) is done, standby for job losses and quite a bit of rationalisation of car dealerships between the two companies.

The tanking new car sales market will drive much of that rationalisation more quickly than it otherwise would have happened in a buoyant market.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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