The New Zealand Shareholders’ Association will back the $2.56 billion takeover of the local software company Trade Me at next week’s special meeting.
The investor group will vote any proxies it holds in favour of the $6.45 a share offer at the April 3 meeting. The association said the offer by UK private equity firm Apax Partners was above the independent valuation and that it was satisfied Trade Me executives won’t reap excessive profits from the transaction.
“Unlike some recent offers, no shareholders have made prior commitments to support the scheme, so it all hinges on the votes cast at the special meeting,” the investor body told members in a note.
The NZSA recommended members read the documentation and seek professional advice if they have any doubts or questions. It prefers members to vote in line with their individual circumstances on resolutions that affect ownership.
The bid has the blessing of Trade Me’s board, chaired by David Kirk who bought the online marketplace when he was in charge of Australian media group Fairfax Media.
The association did question why a scheme of arrangement was being used for the transaction, given its lower hurdle to succeed, and was told the unsolicited offer never put a formal takeover on the table.
A scheme implementation agreement requires 75 percent support and at least half the company’s votes cast, as opposed to the 90 percent threshold of acceptances needed in a formal takeover to trigger compulsory mop-up provisions.
Apax came out of the blue with its original $6.40 a share takeover bid last year and beat out rival Hellman & Friedman in securing the board’s support when it lifted its offer to $6.45. Trade Me shares were trading at $5.01 before the offer was made public and were recently at $6.41.
Independent adviser Grant Samuel valued the company at $5.93-$6.39. If shareholders reject the deal, it anticipates Trade Me will continue on as a listed company and pursue its existing strategies.
They include building new income streams from complementary services, such as developing a data platform for the vast array of information it collects or partnering with a logistics firm to take a cut from the goods sold through its marketplace.
Grant Samuel’s report also said Trade Me has identified merger and acquisition targets in adjacent sectors as a means to expand. The company was touted as a potential bidder for the Stuff news organisation, which Sydney-based Nine Entertainment Co is seeking to exit following its merger with Fairfax last year.