Takeovers have been a real theme in 2023 for the beaten down ASX small cap sector.

We’ve covered a number of articles and topics in recent months as to why takeovers are occurring. We’ve also recently released a white paper outlining several ASX companies that we believe are prime candidates for a future acquisition given their strategic assets and current valuation. In this article we take a look at three company takeovers at varying stages.

At the beginning of November GQG Partners LLC (ASX: GQG) made a bid for Pacific Current Group Limited (ASX: PAC) proposing an acquisition of 100% of the issued shares for $11 per share in cash consideration.

It’s worth noting these two have some history. GQG Partners, a global fund manager, went public on the ASX back in November 2021. In 2016, Pacific made an initial investment of $4 million to support the establishment of GQG Partners.

Not only that but the takeover talk has been in play for some time.

On the 26th of July, Regal Partners Limited (ASX: RPL) officially acknowledged its Non-Binding Indicative Proposal to acquire Pacific at an implied value of $10.772 per share. River Capital, a significant shareholder in Pacific, supported Regal’s bid and had entered into a high-level term sheet to assist in getting the deal over the line.

This was immediately followed the next day by GQG partners announcing their intent to submit a non-binding indicative proposal to acquire Pacific.

Months passed with no updates before Regal Partners announced at the end of September that they would be withdrawing their bid sighting:

Pacific countered this claiming that all participants in the process have been treated consistently, including with respect to access to due diligence information.

Finally on the 1st of November GQG Partners submitted the previously mentioned bid for Pacific for $11.00 per share. The proposal implied a 56% premium to Pacific’s undisturbed 3-month volume weighted average price of $7.05. Unlike Regals original bid GQG have at this stage been unable to obtain the support of major shareholder River Capital.

At the time of writing Pacific’s share price remains below the $11 offer price and it will be intriguing to watch this unfold over the next few months.

On the 1st of November Aussie Broadband (ASX: ABB) confirmed that it had entered into a scheme implementation agreement to acquire Symbio (ASX: SYM).

The deal will see Symbio shareholders receive a combination of $2.26 in cash and 0.192 Aussie Broadband shares for each Symbio share, resulting in an implied value of $3.01 per Symbio share. Additionally, there is an option for a maximum cash or maximum scrip alternative, subject to certain caps and related scale-back provisions.

The Scheme Consideration represents a:

• 26.6% premium to Symbio’s undisturbed closing share price of $2.38 per share on 31 July 2023; and

• 49.5% premium to Symbio’s 1 month VWAP of $2.02 per share as at 31 July 2023.

Furthermore, subject to Symbio board approval and effective completion of the scheme the company is permitted to pay a fully franked special dividend of up to $0.35 cents per Symbio share. Should the special dividend be paid, the cash portion of the consideration received through the Scheme will be reduced by the equivalent amount of the Special Dividend.

Upon the announcement, Aussie Broadband’s Managing Director, Phillip Britt commented:

The confirmation of the scheme implementation agreement may be the end of the bidding war.

Superloop (ASX: SLC) had previously made a best and final offer for Symbio back in September and have not followed up with an improved offer following the superior Aussie Broadband proposal. We are watching this one with interest…

Implementation of the Scheme is expected to occur in February 2024.

In what feels like a lifetime ago Australian Clinical Labs Limited (ASX: ACL) announced its intention to takeover Healius Limited (ASX: HLS) back in March 2023.

The offer, 0.74 Australian Clinical Labs shares for every 1 Healius Share held.

To say the Healius board and major shareholders were offended is an understatement. Healius had raised concerns that the offer from Australian Clinical Labs was ‘misleading’ and ‘inadequate in a number of respects’. At the time of the bid Healius wrote to the Takeovers Panel to address the offer. Unfortunately for Healius the takeovers board considered that ACL’s replacement bidder’s statement sufficiently deals with the issues raised in Healius’ application. Following this, the board of Healius recommended to shareholders that they reject the offer.

There were further concerns raised by The Royal Australian College of General Practitioners (RACGP).

In a letter to the Australian Competition and Consumer Commission (ACCC) there were concerns raised that the merger between the two could lead to a significant reduction in competition between pathology companies to the potential detriment of patients, particularly those in rural and remote areas. The competition watchdog has since taken action although has suspended its timeline in respect to its review of the proposed merger.

As a result, Australian Clinical Labs has extended the offer period again with a new closure date of 27 February 2024 closing in on 12 months from when the original offer was made.

The past year has proven to be for the small cap sector, marked by a series of noteworthy attempted and completed acquisitions. The landscape has been diverse, and these cases underscore the intricate dynamics of strategic alignment, shareholder interests, and regulatory considerations that define successful takeovers.

At TAMIM, we remain keenly observant and proactive in this arena. Our expertise is continually sharpened by these acquisition narratives, guiding our investment strategies and decisions. With a vigilant eye on the evolving opportunities in the ASX small cap sector, we are poised to leverage these insights, ensuring we stay at the forefront of value creation and sustainable growth for our investors.