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WAM Leaders (ASX: WLE), a listed investment company managed by Wilson Asset Management, is planning to swallow QV Equities (ASX: QVE) in a merger that would value the combined group at more than $2 billion.
The announcement today has effectively upped the ante by WAM Leaders in its bid for QV Equities after it announced a proposed $216 million takeover offer for the investment minnow in January.
Under an agreement announced today, WAM Leaders will acquire all the shares in QV Equities in a cash and scrip offer, the final price of which will be determined by the net tangible assets (NTA) of each of the companies.
Based on the most recent financials from both, QV Equities shares could be worth up to $1.058 each, valuing the target at $240.6 million.
WAM Leaders has a current market value of $1.77 billion, although NTA is $1.74 billion, and prior to today’s announcement QV was valued at $211.5 million with a pre-tax NTA of $238.8 million.
QV Equities investors who opt for a cash payout for their shares will have to accept a 2.5 per cent discount to the pre-tax NTA per share. With the implementation date set for mid-July, the cash price being offered could change.
“The WAM Leaders board of directors and QVE’s independent directors believe that the scheme will be beneficial to both companies and result in a strong merged entity leveraging Wilson Asset Management’s investment strategy and experience in managing listed investment companies, to the benefit of all shareholders,” says WAM Leaders chairman and chief investment officer Geoff Wilson.
“We look forward to welcoming QVE shareholders to the Wilson Asset Management community.”
The independent directors of QV Equities have voted in favour of the merger proposal, in the absence of a better offer, after concluding it is in the best interests of shareholders.
“We are pleased to announce the proposed transaction, which represents an enhanced offer compared with the takeover offer and is an attractive proposition for QVE shareholders providing the opportunity to narrow the persistent valuation discount to NTA and realise consideration for their shares at a premium to QVE’s recent share price history,” says QV Equities chairman Peter McKillop.
WAM Leaders says the merged group will offer QVE shareholders access to a larger company with a more liquid market for their shares, as well as a higher annual fully franked dividend yield and access to Wilson Asset Management's investment expertise.
WAM Leaders shareholders will also benefit from increased on-market liquidity through an increased market capitalisation of about $2 billion and a shareholder base of about 30,000.
Those QV Equities shareholders who opt for WAM Leaders shares in the merger will be eligible for the company’s FY24 final dividend, expected to be 4.6c per share.
QV Equities shareholders also will receive a quarterly dividend of up to 1.3c per share for the March 2024 quarter to be paid in June 2024.
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