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- CML Group (CGR) has told shareholders to do nothing about the Scottish Pacific or Consolidated Operations Group (COG) deal at this point in time
- Earlier this week, the company left the merger deal with COG and went with Scottish Pacific
- A few days later, COG matched Scottish Pacific’s price for the company
- The company is now telling its shareholders that the COG deal is “highly uncertain”
- The Board of CML has unanimously recommended the Scottish Pacific Scheme of Arrangement
- However, it has told its shareholders to not do anything at the moment
- On market close, CML is up 3.67 per cent and is selling shares for 56.5¢ apiece
CML Group (CGR) has told shareholders to do nothing about the Scottish Pacific or Consolidated Operations Group (COG) deal at this point in time.
CML has entered into a Scheme Implementation Deed with Scottish Pacific Group. The proposal is for Scottish Pacific to purchase 100 per cent of CML shares for 60¢ apiece.
Past Offers
Initial COG Offer
In November, CML was first approached by COG and entered into an agreement for a merger. The COG offer was a mix of COG scrip and cash and also implied value of 48¢ per share at the time.
The cash component of the offer was capped.
Scottish Pacific Offer
In mid-December, Scottish Pacific put forward an unsolicited non-binding indicative offer to purchase 100 per cent of CML share capital at 60¢ per share (an offer of $0.57 for each CML share and a permitted dividend of $0.03 per share).
Response
In the absence of a binding offer, CML continued to progress with the COG offer and shareholders received a Scheme Booklet on December 24.
However, on Monday the company said that it had decided to terminate the contract as it believed COG breached the contract. It then signed the deal with Scottish Pacific.
COG’s New Offer
Due to this news, COG decided to increase its proposal to 57¢ per share plus a three-cent dividend. Which matches the Scottish Pacific proposal.
With this new proposal, shareholders would also be given an opportunity to receive a proportion of cash while continuing to obtain benefits in a merged COG-CML in the future through a COG shareholding.
Under the Scottish Pacific proposal, CML shareholders won’t get this opportunity.
CML Response to the New Offer
CML told its shareholders yesterday that any transaction proposed by COG is “highly uncertain”. The company said that COG has not presented CML with any transaction that is capable of implementation.
“This is because, when COG acquired securities in CML, COG appears to have spent the equity capital finance COG raised specifically to meet its obligation to fund the scheme consideration,” the company explained.
“As such, CML’s board considers that the type of transaction described in COG’s announcement has significant risks, largely associated with COG’s ability to fund the cash component of any such transaction,” it added.
CML said the scheme with Scottish Pacific is highly capable of implementation.
“On the other hand, the Scheme with Scottish Pacific is binding, is entirely for cash, and has no material funding risk,” it told its shareholders.
Scheme of Arrangement with Scottish Pacific
Today, the company said the Board unanimously recommends the Scottish Pacific Scheme of Arrangement.
The scheme is subject to Conditions Precenedt, which includes an independent expert to look over the project to see if the deal has the best interest for shareholders.
The scheme will also need FIRB approval, ACCC statement, Court approval and CML shareholder approval.
CML has told its shareholders they do not need to do anything at this time.
“CML Board members intend to vote their shares in favour of the Scheme and CML’s major shareholder, First Samuel Limited who controls 17.7 per cent of CML’s issued shares, had advised their intention to vote in favour of the Scheme with Scottish Pacific, in the absence of a superior offer,” the company said.
A scheme booklet relating to the scheme with Scottish Pacific is now being prepared and is expected to be sent to shareholders in April 2020, subject to ASIC registration and Court Approval.
On market close, CML is up 3.67 per cent and is selling shares for 56.5¢ apiece.
