Freehills has recently advised ASX listed Energy Developments Limited (EDL) on its defence of a $430 million takeover bid by private equity firm Pacific Equity Partners (PEP).
Freehills Corporate M&A partners Andrew Pike and Philippa Stone led the transaction and were assisted by corporate M&A senior associate Daniel Krutik and lawyer Clayton James.
The takeover bid for EDL closed on 16 February, with the bidder having achieved a shareholding of 79.6 per cent, short of the 90 per cent level required to be able to compulsorily acquire the outstanding minority shareholdings.
The takeover bid was not recommended to shareholders by the independent directors of EDL for a number of reasons, but mainly focused on value considerations: the bid price was $2.75 compared with a value of $3.17 to $4.09 per share assessed by an independent expert.
Freehills partner Andrew Pike observed, ‘The transaction was particularly interesting as it involved a private equity firm launching a bid that was not recommended by directors - private equity historically prefer friendly deals. PEP declared the bid unconditional early on in order to encourage shareholders to accept the offer but ultimately did not achieve the 90 per cent threshold for compulsory acquisition. PEP is now the holder of a significant majority stake in an ASX listed company. A number of institutions remain on the register.’
PEP has stated publicly that it will not make a follow on takeover bid to mop up the minorities in the next 12 months.
Given the takeover bid was not recommended by the independent directors, EDL was often required to respond quickly to announcements and other actions taken by the bidder during the course of the takeover.
‘When a company is subject to a ‘hostile’ takeover it is important that the target company has confidence in its advisers. We worked very closely with the board and management of EDL to assist them in their response to PEP’s takeover bid including making sure that shareholders received accurate and timely information from their directors in respect of the bid.’ said Pike.
Freehills worked closely on this transaction with Palladio Partners, EDL’s corporate adviser.
Andrew Pike and Daniel Krutik have advised on a number of major takeover defences including acting for Rinker when it was the subject of a $17 billion hostile takeover from Cemex and acting for TAB when Tabcorp made its hostile $2.5 billion takeover bid.
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