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Pepper takeover deal becomes effective

by Reporter10 minute read
Pepper takeover deal becomes effective

The Federal Court of Australia has approved the scheme implementation deed for Red Hot Australia Bidco Pty Ltd to acquire all of Pepper’s shares.

The federal court lodged its approval orders with the Australian Securities and Investments Commission on Tuesday (21 November), making the scheme legally effective.

The securities of Pepper Group were suspended from quotation at the close of trading on Tuesday, following lodgment of the Federal Court of Australia’s orders with ASIC approving the scheme of arrangement.

However, Pepper Group issued 26,232 shares at $3.68 per share (totalling $96,534) “in satisfaction of performance rights which were issued to certain former employee participants in the company’s long-term incentive scheme”. The vesting of these performance rights were accelerated due to the takeover scheme becoming effective.


Earlier this month, nearly all (99.9 per cent) of Pepper’s voting shareholders voted in favour of the scheme implementation deed for Red Hot Australia Bidco — an entity owned by certain funds, clients or accounts managed or advised by KKR Credit Advisors (US) LLC or its affiliates — to acquire all of Pepper’s shares (except those that are subject of the retention option).

As a result of the positive vote, Pepper shareholders not electing one of the election options in the scheme will receive $3.60 in cash per share and a special dividend of 10 cents a share. This amount would equate to approximately $682 million.

The scheme also included an equity alternative to the cash consideration (scrip option), allowing shareholders (other than certain foreign ineligible shareholders) to instead receive one share in Red Hot Australia Holdco Pty Ltd (Holdco), which is the owner of 100 per cent of the shares in Bidco, for each Pepper share they hold.

Speaking after the shareholder meeting last week, Pepper Group chairman Seumas Dawes said: “We are pleased with the strong vote in favour of the scheme, which directors believe delivers maximum value for shareholders. In addition, we are delighted that many shareholders chose to remain invested in the Pepper business.”

Commenting on what the transaction means for the Pepper Group business, Group CEO Mike Culhane added: “With the support of KKR, we now have the opportunity to accelerate our long-term growth plans around the world. KKR’s investment is a strong endorsement of the outlook for our business. We are confident this partnership will position the company for long-term success."

The scheme will be formally implemented on 4 December, when shareholders will receive the cash consideration for their shares or an allocation of shares in Holdco. 

[Related:  Pepper accepts $675m takeover deal]

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