The board of Contango Income Generator (ASX: CIE) has asked shareholders to take no action with regard to a $91.2 million off-market takeover offer from WAM Capital (ASX: WAM), claiming the bid is part of an effort to destabilise the company.
On Monday, WAM announced its off-market takeover bid for all the shares in CIE, a diversified investment vehicle with interests in major Australian listed companies including Tabcorp, APA Group, Charter Hall Group, Coles Group, REA Group and more.
WAM's consideration for CIE is 1 WAM share for every 3 CIE shares, representing a premium of 17.6 per cent to CIE's 25 September share price, valuing the bid at $91.2 million.
Based on current WAM prices the deal is valued at around $93.7 million, or 75 cents per every CIE share.
WAM, helmed by founder Geoff Wilson (pictured), hopes to attract CIE shareholders by pointing to "disappointing results" at the investment manager and promising a brighter future for the company under the Wilson banner.
But according to the board of CIE the unsolicited offer is consistent with WAM's efforts to "destabilise the company".
CIE says the bid "is an unfortunate and costly distraction given the recent strong endorsement by shareholders of CIE's new investment strategy", which recently received the support of 68 per cent of shareholders.
Further, CIE says, excluding WAM and another competing fund manager, 80 per cent of all votes cast were in favour of the new investment strategy.
WAM currently holds a 13.82 per cent interest in CIE, down from 14.13 per cent on 28 September.
The push back from CIE comes just weeks after another of WAM's takeover targets Concentrated Leaders Fund (ASX: CLF) also shunned an off-market takeover bid from Wilson.
CLF, an investment manager focusing primarily on ASX 200 listed entities, claimed WAM's bid was opportunistic and significantly undervalued the company.
WAM hoped to attract CLF shareholders into the approximately $68.7 million bid with claims its target was poorly run and mismanaged capital.
Shares in WAM are up 0.45 per cent to $2.24 per share at 11.09am AEST.
Business News Australia