Accept Resimac offer, RHG tells shareholders
After several months of talks between the two groups, RHG's board unanimously recommended a 44.1¢ a share bid by Resimac on Monday.
RHG said it would pay a fully-franked dividend of 3¢ a share, irrespective of whether the takeover proposal went ahead or not.
If the proposal gets shareholders' support, it and the dividend payment would result in RHG being valued at $145.3 million and total payments to shareholders of 47.1¢ a share.
RHG's shares rose by 15 per cent to 46¢ on the news, suggesting investors expect shareholders to approve the acquisition.
RHG's main asset is RAMS' lending book. RAMS was a competitor of the big banks before the global financial crisis.
In 2007, RAMS' branch network and brand was sold to Westpac for $140 million, and RHG's loan book is being run down.
Resimac offered to buy RHG's loan book earlier this year but the bid was too low.
The latest bid is a joint proposal by Resimac and former Babcock & Brown banker and RHG director Trevor Loewensohn, who has formed a company to acquire RHG and then sell the mortgage assets to Resimac.
RHG chairman Glenn Goddard said the company had received several expressions of interest for a change of control of the business since 2011, when it announced a plan to return all available cash shareholders.
Resimac's proposal was the most attractive offer so far, and it gave shareholders a chance to crystalise their holdings in RHG for cash "at an attractive value" while removing the risk of winding down the mortgage book, he said. Resimac's executive director, Mary Ploughman, said the acquisition would help diversify its $3.5 billion funds under management and help it to be more efficient. "It will enable further operating efficiencies ... and is in line with our objectives to grow the business through acquisition and increasing core business originations," she said.
Frequently Asked Questions about this Article…
Resimac has lodged a sweetened takeover bid of 44.1 cents a share for RHG. RHG's board unanimously recommended the offer and also declared a fully-franked dividend of 3 cents a share, which would bring total cash to shareholders to 47.1 cents a share if the deal is approved.
RHG directors say the Resimac proposal is the most attractive offer received, gives shareholders a chance to crystallise their holdings for cash at an attractive value, and removes the risk associated with winding down RHG's mortgage loan book.
RHG announced a fully-franked dividend of 3 cents a share that will be paid regardless of whether the takeover proceeds. Combined with Resimac's 44.1 cent offer, shareholders would receive total payments of 47.1 cents a share if the transaction is approved.
If shareholders approve the offer and the dividend is paid, RHG would be valued at approximately $145.3 million, with total payments to shareholders of 47.1 cents per share.
RHG's main asset is the lending book from RAMS. RAMS was a challenger to the big banks before the global financial crisis; its branch network and brand were sold to Westpac in 2007 for $140 million, and RHG's loan book is currently being run down.
Trevor Loewensohn is a former Babcock & Brown banker and an RHG director who has formed a company to acquire RHG. The latest bid is a joint proposal in which Loewensohn's company would acquire RHG and then sell the mortgage assets to Resimac.
RHG shares jumped about 15% to 46 cents on the news of the offer, indicating the market expected shareholders to approve the acquisition.
Resimac's executive director Mary Ploughman said the acquisition would help diversify its $3.5 billion funds under management, enable further operating efficiencies, and support Resimac's objectives to grow through acquisition and increase core business originations.
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