The Panel announced today that it has declined an application by Fast Scout Limited (Fast Scout ) in relation to its proposed bid for Bigshop.com.au Limited (Bigshop ). Fast Scout has applied for a declaration of unacceptable circumstances in relation to a proposed placement of 10 million ordinary shares by Bigshop to Macquarie Bank Limited (Macquarie ) and other arrangements (the Proposal ) and for an interim order restraining Bigshop from proceeding with the Proposal until the matter is determined by the Panel.
The Panel considers that the Proposal (as amended) would not reasonably frustrate the intention and purpose of Fast Scout's proposed offer for Bigshop.
The Panel recognises that the proposal will breach a proposed defeating condition of the bid. The Panel also recognises that it is within Fast Scout's right to make its bid subject to conditions which the Proposal would breach, and if those parts of the Proposal proceed, it would be within Fast Scout's right to decide not to waive the conditions and allow its bid to close unfulfilled.
The Panel said:
"In view of the unusual circumstances this has been a very difficult decision.
- On balance, we do not think that the amended Proposal (including the placement of 6.667 million shares, and the commitment to a fee of $150,000 p.a., and the appointment of three directors to the board of Bigshop) constitutes action which could reasonably be considered to frustrate the intentions of Fast Scout in seeking control, or effective control, of Bigshop.
- However, having said that, we also consider that the Proposal came close to being a frustrating action.
We also wish to express our concern at the time it has taken Fast Scout to pursue its bid. The ASX Listing Rules prevent a company from issuing or agreeing to issue shares, without the approval of existing shareholders, for three months after it is told in writing that a person is making, or proposes to make, a takeover bid for securities in it. The practical effect of this is to give a bidder an automatic three month period within which to implement its bid, without being frustrated by an issue of shares other than an issue approved by shareholders. In the Panel's view, there was every reason for Fast Scout to have had its bid well under way before the expiry of that three month period on 13 September."
Under the terms of Fast Scout's bid, which is for 51% of each offeree's shares, and ASX Listing Rules in relation to shares held in escrow, Fast Scout can only acquire shares which would take it to 33.6% of the voting power in Bigshop. If the Proposal proceeds, that maximum percentage will fall to 31.5%. The Panel does not consider that that fall will frustrate the stated intention of Fast Scout's bid which is to achieve control, or "effective control", of Bigshop.
The parties to the matter have assisted the Panel by giving undertakings which materially facilitated the decision:
- Macquarie has given an undertaking that it will not vote any of the placement shares in the proposed resolution of Bigshop under section 648E of the Corporations Act to approve the making of Fast Scout's partial takeover bid;
- Bigshop has given an undertaking that no directors appointed under the Proposal will make recommendations to Bigshop shareholders on the section 648E resolution; and
- Fast Scout has given an undertaking that, provided the relevant Bigshop meetings proceed in a timely manner, it will not extend its bid beyond a three month period, unless Fast Scout's bid is unconditional at the time of the extension, or the board of Bigshop consents to the extension.
The Panel will give its reasons to parties today for factual review and will publish them on its website on Monday.
The sitting Panel for this matter is:
Mr Brett Heading (sitting President); Ms Meredith Hellicar (sitting deputy President); and Dr Tro Kortian.
Director, Corporations and Securities Panel
Level 47 Nauru House
80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3501