Pepper has announced that it has submitted a binding offer to acquire 100 per cent of the issued share capital of RHG.
Under the deal, Pepper would acquire RHG for a consideration of 35 cents per share in cash as well as shares in Cadence Capital Limited (CDM) at a ratio of one CDM share for every 10 RHG shares.
Based on the CDM share price as at 15 August 2013, the bid is valued at 49.65 cents per share.
It is also proposed that CDM will pay a fully franked dividend of 5.0 cents per CDM share owned through exchanging RHG shares.
Based on the closing price of CDM shares on 15 August 2013 the Pepper bid is 1.65 cents per share higher than a previous scheme announced on 15 July 2013 by Australian Mortgage Acquisition Co. Pty Ltd. and Resimac Ltd (the Resimac Syndicate).
“The combination of Pepper and Cadence Capital as RHG’s largest shareholder delivers superior value to RHG shareholders in the form of cash, Cadence stock, and fully franked dividends. The involvement of Cadence Capital in our syndicate also enhances the certainty of execution of our proposal relative to that of the Resimac Syndicate,” Pepper’s group managing director and chief executive Patrick Tuttle said.
“From Pepper’s perspective, the acquisition of RHG is strategically important as we seek to further extend our lending, servicing and securitisation expertise into the prime residential mortgage sector,” he said.
Pepper’s executive chairman Mike Culhane said, “Pepper and Cadence Capital have carefully considered what would be most appealing to the RHG shareholder constituency and believe their combined structure delivers the optimal result for all parties”.