- WAM Capital (WAM) has revealed an off-market bid to take over the recently strained investment company Concentrated Leaders Fund (CLF)
- WAM Capital intends to fully-acquire CLF shares at a two for 3.7 share-for-share exchange, respectively, a 15.2 per cent premium on CLF’s recent share price
- In its opening bidder’s statement, WAM Capital claimed CLF’s newly appointed Manager Dr David Sokulsky was improperly elected without shareholder approval and has overseen a number of poor financial decisions
- The bid currently has no time limit but does require majority approval to move forward
- WAM Capital closed 1.42 per cent in the red for $2.08 per share
- Concentrated Leaders Fund (CLF) closed 4.04 per cent in the green for $1.03 per share
WAM Capital (WAM) has revealed an off-market bid to take over the recently strained investment company Concentrated Leaders Fund (CLF).
CLF invests primarily in ASX 200 companies and has consequently been hit hard by the recent market volatility, tumbling around 20 per cent since the beginning on the year.
WAM Capital intends to fully-acquire CLF shares at a two for 3.7 share-for-share exchange, respectively, a 15.2 per cent premium on CLF’s recent share price.
The buyout price roughly translates to $1.14 per CLF share, which may represent a premium now but is a significant discount when compared to much of CLF’s trading history.
Before taking a sharp downturn earlier this year, CLF was trading well above the current buyout valuation, reaching a high of C$1.41 in late January. Before the recent economic turmoil, CLF hadn’t traded at $1.14 per share since mid-2017, making this an historically discounted buyout price.
In the bidder’s statement, WAM Capital took aim at CLF’s newly appointed Manager Dr David Sokulsky, stating he was improperly elected without shareholder approval and has overseen a number of poor actions leading up to the recent share price slump.
WAM also criticized CLF’s recent externalisation of the its investment management agreement to Carrara Investment Management, which is currently controlled by Dr David Sokulsky.
Further, following David’s appointment CLF chose to materially reduce its size by around 12 per cent through a special dividend payment.
Given the recent market volatility, WAM believes the reduction has severely hindered cash reserves and said CLF’s recent manoeuvres “represent a pattern of poor decision making on behalf of CLF shareholders”.
The offer requires, among other stipulations, majority approval to move forward, so time will tell if CLF shareholders consider the offer a much-needed olive branch or simply an opportunistic play.
WAM Capital closed 1.42 per cent in the red for $2.08 per share.
Concentrated Leaders Fund (CLF) closed 4.04 per cent in the green for $1.03 per share.