TP04/076
The Panel has concluded the proceeding arising from the application from Australian Leisure & Hospitality Group Limited (ALH) dated 20 July 2004 alleging unacceptable circumstances in relation to the off-market takeover bid by Bruandwo Pty Ltd (Bruandwo) for all the ordinary shares in ALH. The Panel’s media release TP04/63 provides further details regarding the application.
The application required the Panel to consider what disclosures a bidder should make regarding its intentions, especially in circumstances where there is a possibility that non-accepting shareholders will retain a minority interest in a target company controlled by the bidder.
In its deliberations, the Panel considered the particular circumstances of Bruandwo’s bid for ALH, especially the following two elements.
Bruandwo’s bid is subject to a 50.1% acceptance condition. Therefore the decision that each ALH shareholder needs to make in assessing Bruandwo’s offer is whether to accept the cash consideration being offered by Bruandwo, or retain their shares in ALH in circumstances where it is possible that Bruandwo may end up holding more than 50% but less than 90% of the ALH shares.
Although Bruandwo disclosed an intention to develop a plan for the integration of ALH’s businesses with the businesses of Bruandwo, it did not provide a substantive explanation of the direction this planned integration would take or the impact it may have on ALH shareholders.
Given the circumstances of Bruandwo’s bid, the Panel considered it appropriate that ALH shareholders be provided with more information than was provided in the Bruandwo bidder’s statement sent to shareholders. The Panel required that Bruandwo make further disclosure of:
- the nature and objectives of the proposed integration;
- information regarding the track record of the existing Bruandwo businesses to allow ALH shareholders to form a view on Bruandwo’s ability to manage ALH in the future;
- the identity of Bruandwo’s proposed candidates for election to the ALH board, in the event that it receives sufficient acceptances to satisfy the 50.1% condition but less than 90% of the ALH shares; and
- Bruandwo’s intentions regarding any change to ALH’s current dividend policy.
In considering what additional information should be provided to assist ALH shareholders to assess the merits of the Bruandwo bid, the Panel recognised the limitations on the information that could be provided by Bruandwo. The Panel only required information that was sufficiently reliable that it could not be considered matters of opinion or speculation. The Panel accepted Bruandwo’s submission that it does not have and was not able to access the detailed information regarding ALH’s operations which would allow Bruandwo to state precisely how it will integrate ALH into its existing businesses.
The Panel invited Bruandwo to provide further information relating to the above issues in the form of a supplementary bidder’s statement. The Panel also gave ALH an opportunity to make submissions regarding the supplementary bidder’s statement. The Panel decided that the supplementary bidder’s statement provided by Bruandwo did improve the ability of ALH shareholders to assess Bruandwo’s bid.
The Panel accepted an undertaking from Bruandwo to issue a supplementary bidder’s statement in the form reviewed by the Panel, and to send copies of the amended parts of the bidder’s statement to ALH shareholders as soon as possible after its issue.
Based on the undertaking provided by Bruandwo, the Panel concluded its proceedings on the basis that it was not necessary to make a declaration of unacceptable circumstances and that no order was required. In accepting Bruandwo’s undertaking, the Panel noted that Bruandwo had confirmed that it would extend its offer period by at least 5 business days.
The sitting Panel comprised Elizabeth Alexander (sitting President), Jennifer Seabrook (sitting Deputy President) and Robyn Pak-Poy.
Nigel Morris,
Director, Takeovers Panel
Level 47 Nauru House, 80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3501
nigel.morris@takeovers.gov.au
