Macquarie Bank has now officially announced its intention to acquire all the shares of RG Capital after a two day trading halt.
The acquisition has sent other media stocks soaring as investors take another look at the good prospects for advertising and media.
Macquarie Bank, through its acquisition vehicle Regional Media Pty Ltd, intends to buy all shares in the company for $3.00, which is 10 cents higher than the share price when it halted trading earlier this week.
The transaction values the company at $173 million and is a 50% increase on the price of RG shares when they were first floated about 4 years ago.
Macquarie Bank has plans for this to be the first asset in a new unlisted media investment fund.
Macquarie Bank’s Chief Financial Officer Greg Ward says the price is “full and fair value for the company,” which is an “attractive asset.”
RG Capital’s Directors have unanimously supported the proposed acquisition and have recommended that shareholders vote in favour of the scheme, saying it is “in the best interests of all shareholders.” But if the takeover falls apart, there is a clause that will force RG Capital to pay a substantial part of its profit to Macquarie Bank as a penalty.
Documents are expected to be sent to shareholders in July, with meetings to be held in mid-August to finalise the acquisition scheme, which is subject to all the usual ASX acquisition procedures.
RG Capital Chairman Tim Hughes has resigned his positions on the RG Board and will join Macquarie Bank as Chairman of the new fund. Brian Bickmore will replace him as Chairman of RG Capital.
Hughes says: “I have accepted this position because Macquarie Bank has a first class track record… RG Capital has a first class management team headed by Rhys Holleran [and] will provide a platform for the fund to expand… it is a financially strong business with reliable cash flows.”
The new Macquarie Bank fund wants to “create value by participating in further consolidation of the regional media sector.” It plans to use economies of scale to introduce lower cost structures, apply consistent management across a portfolio of assets, provide a common interface for advertisers and bring a “stronger capital base” for growth.
RG Capital has an existing amount of $57 million net debt which the new fund may refinance. Macquarie Bank manages an asset portfolio of more than $63 billion across the world.
Further information from RG Capital, including details of the scheme, can be found via the link below.