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AMA’s unusual, but successful, takeover of 4WD

Leath Nicholson (Principal) and Andrew Bini (Principal)

On 19 January 2018 AMA Group Limited (ASX : AMA) announced the successful completion of its takeover of Automotive Solutions Group Limited (ASX : 4WD).

The takeover was achieved by way of a conditional off-market bid for all of the shares in 4WD.

The takeover was initially launched as on-market takeover bid, which was announced to the market on 23 May 2017. Under that bid, AMA offered $0.35 for every 4WD share. At that time AMA held 18.4% of all the issued 4WD voting rights. That offer closed on 7 July 2017 with AMA holding 31.29% of the voting rights in 4WD.

On 1 November 2017 AMA announced a second takeover bid, this time being an off-market conditional bid for the balance of shares in 4WD at $0.35 per 4WD share. The off-market bid was subject to several defeating conditions, including a condition that AMA receive acceptances for at least 50.1% of the voting rights in 4WD by the end of the offer period.

AMA’s Bidder’s Statement was lodged at ASIC on 1 November 2017. However, on 2 November 2017 4WD announced the resolution of certain matters that had been at issue between its directors and various shareholder groups (including the withdrawal of two separate EGM’s called by the opposing groups and the withdrawal of litigation launched by a director against 4WD), the resignation of all directors other than the chairman the appointment of new board members.

In response to 4WD’s announcement, and to deal with the sudden change in circumstances in 4WD, AMA issued a Replacement Bidder’s Statement by way of a First Supplementary Bidder’s Statement on 10 November 2017.

Then, on 24 November 2017, 4WD announced that it did not have sufficient resources to pay its estimated tax obligations to the Australian Taxation Office requiring 4WD to enter into an arm’s-length loan facility agreement with AMA. Under the terms of the facility agreement AMA agreed to provide 4WD up to $3.5 million in funds for the purposes of funding those tax payments, once they had been determined by the ATO.

On 28 November 2017 AMA received 4WD’s Target’s Statement which included a unanimous recommendation by 4WD’s directors that 4WD shareholders accept AMA’s offer. Accompanying the Target’s Statement was an Independent Experts Report in which BDO Corporate Finance expressed their opinion that the offer was fair and reasonable to 4WD shareholders.

By 15 December 2017 AMA had received acceptances from 4WD shareholders for over 90% of 4WD’s voting rights, entitling AMA to commence compulsorily acquisition of the balance of the 4WD shares under Section 661A of the Corporations Act 2001 (Cth). On 19 January 2018 AMA announced the statutory share transfer procedure had been completed and that 4WD would be delisted from the ASX from the close of business that day.

Aside from being lengthy, the takeover process was unusual and complex, given the changes in 4WD’s circumstances with the resolution of the directors and shareholder issues and subsequent entry into the arm’s-length loan facility.

Nicholson Ryan Lawyers is delighted to have assisted AMA in the successful takeover of 4WD.