Sandon Capital is moving closer to its proposed acquisition of Mercantile Investments, buying up more its securities and flagging a shareholder meeting to approve the deal.
Legendary corporate raider Ron Brierley’s announcement earlier this month that he would retire triggered a takeover offer for his investment company, Mercantile Investments.
Bidder Sandon Capital has links to Mercantile. Sandon’s founder and chair Gabriel Radzyminski is also an executive director of Mercantile.
In the latest move, on Monday Sandon entered into an agreement to acquire 50 million unlisted options in Mercantile and an issue of ordinary shares at a premium of 15 per cent over Friday’s market price.
On June 3, Sandon Capital Investments made an offer for all of the shares in Mercantile Investment Co that it did not already own.
At the same time the bid was announced, Sandon entered an agreement to buy 52 million Mercantile shares (around 18.8 per cent of Mercantile’s issued capital) from Siblow Pty Ltd, an entity controlled by Brierley.
On June 20 Siblow, which still held 24.7 per cent of Mercantile stock, announced that it would accept the Sandon offer.
Sandon said the combination of the two companies had the potential to create value by increasing the liquidity of the shares, increase scale and diversity in the investment portfolio, provide economies of scale and move the market price closer to net asset backing.
Sandon is continuing to prepare a bidder’s statement for the offer and a notice of meeting to be sent to its shareholders to seek the required approvals for the offer to proceed. These documents will be issued in July.