Half of AHG favours Eagers merger

AP Eagers’ takeover of Automotive Holdings Group has secured the backing of more than half its rival’s shareholders despite the AHG board advising no action on the offer just yet.

AP Eagers owns 28.85 per cent of all AHG shares and institutional investors holding another 22.5 per cent have indicated they will accept the offer, AP Eagers said.

“To move beyond 50 per cent so early in the offer period represents a massive vote of confidence in our merger proposal,” AP Eagers chief executive Martin Ward said.

AHG took issue with that statement, pointing out the institutional acceptances are non-binding, can be withdrawn at any time and do not transfer voting rights to Eagers.

AP Eagers wouldn’t say which investors had indicated they were backing the offer, but News Corp reported that Perpetual Limited and Argo Investments – who own 9.22 and 1.79 per cent respectively – were likely to accept.

Under the off-market takeover bid, AP Eagers has until mid-September to acquire 90 per cent of all AHG shares, at which point it can compulsorily acquire the remainder.

AP Eagers is offering one of its shares for every 3.8 AHG shares owned. At noon yesterday, AP Eagers shares were trading up 1.5 per cent to $8.81, while AHG shares were down 0.83 per cent to $2.38.

AHG last week advised shareholders to sit tight on the offer until it responded with a target’s statement, which would include an analyst by independent experts KPMG.