Methven receives $118m bid from GWA
AUCKLAND: Australian kitchenware firm GWA Group is mounting a $118 million bid for Kiwi tapware maker Methven and has the blessing of cornerstone investor Brendan Lindsay, barring the emergence of a better offer.
Methven’s directors have agreed to a scheme implementation agreement in which GWA would pay $1.60 a share, a 39% premium to the $1.15 price before the deal was announced yesterday.
Since trading resumed, the shares have climbed 23% to $1.41. GWA would also let Methven pay an interim dividend of up to 5c from profits in the sixmonth period ending December 31.
The New Zealand firm’s directors are obliged to unanimously recommend the offer, provided it falls within the assessed valuation range of independent adviser Grant Samuel, and provided no superior bid emerges. The agreement includes a $1.2 million break fee, the equivalent of 1.6c per share.
GWA already has Methven’s biggest shareholder — Sistema millionaire Mr Lindsay — onboard, giving it 19.9%. Another 2.1% will be committed by the directors, meaning the Australian firm starts at 22%.
To secure control, it only needs 75% support at a meeting where at least half of the company’s voting rights are cast, rather than the 90% threshold needed in a formal takeover to enforce mopup provisions. The meeting is expected to be held in March next year.
‘‘The value offered, which includes the permitted dividend, is highly attractive as it does acknowledge future growth in Methven and allows shareholders to realise value today,’’ chair Alison Barrass said in a statement.
‘‘Given there was a high level of understanding between both parties, a scheme proposal was seen as the best and fairest way of expediting this transaction and providing certainty of outcome within a defined timeframe at an agreed and compelling value.’’
Methven said GWA had committed to keeping the New Zealand design, innovation and manufacturing base for the enlarged group. That was a crucial element of the deal, it said.
GWA said it expected to cut duplicated costs by about $5 million by the 2021 financial year, primarily in logistics, freight, and listing costs.
It sees the deal as boosting pershare earnings by a midsingle digit in the 2020 year, rising to a highsingledigit gain once the doubled up costs are stripped out.
The Australian company will fund the deal from its existing banking facilities.
‘‘The transaction will enhance the regional diversity of our revenue and earnings through leveraging Methven’s presence in international markets to accelerate growth opportunities for Methven and GWA brands aligned to our core water solutions,’’ GWA managing director Tim Salt said.
GWA last traded at A$2.77 on the ASX, and has decreased 2.8% so far this year.
The scheme also needs High Court approval, and the transaction will require Overseas Investment Office signoff. — BusinessDesk