Bidding war for RHG

The home-loan business is in the process of assessing the new proposal and urges its caution for its shareholders.

RHG has become the subject of a bidding war after receiving a competing proposal from specialist mortgage financier Pepper Australia.

Pepper is seeking to purchase all of RHG's shares through a scheme of arrangement at 46 cents per ordinary share, which it said would not be reduced by the fully-franked dividend of three cents per share that RHG had announced on Monday.

The rump of the old Rams home-loan business announced at the start of the week that it had entered into a Merger Implementation Deed (MID) with a syndicate comprising Resimac and Australian Mortgage Acquisition Company to acquire 100% the ordinary shares in the business at 44.1 cents a share (see Tom Elliott's RHG bid may need a top-up).

RHG's board had recommended that its shareholders accept the bid, in the absence of a superior proposal and subject to the evaluations from an independent expert.

While one of the obligations under the MID disclosed to the market was exclusivity with the Resimac syndicate, RHG said it "is assessing the competing proposal as permitted under the MID, and at this stage makes no comment about the outcome of that assessment."

Under the MID the company cannot enter into an agreement with Pepper until the Resimac Syndicate has had the opportunity to offer a  counter-proposal.

"RHG has no information in that regard, and urges that shareholders exercise caution," the company said.