The board of media buyer and market researcher Mitchell Communication Group has agreed to a $363 million takeover offer by Aegis Group plc.
Aegis is a London Stock Exchange-listed marketing communications company.
Mitchell group shares were in a trading halt after earlier rising 4 cents, or 4 per cent, to $1.04. That share price, the highest since January 2008, gave the company a market capitalisation of about $314 million - implying today's takeover offer amounts to a premium of about 15 per cent.
‘‘The board of Mitchell unanimously recommends Mitchell shareholders vote in favour of the transaction in the absence of a superior proposal and subject to an independent expert concluding the scheme is in the best interests of Mitchell shareholders’ group,’’ Mitchell and Aegis said in a joint statement today.
Aegis proposes to acquire Mitchell via a scheme of arrangement for $363 million, based on the cash consideration of $1.20 per Mitchell share and including options and performance rights.
Mitchell shareholders can elect to receive their consideration in cash, or Aegis shares, or a combination of both.
If the transaction is approved, Mitchell shareholders will also receive a fully franked Mitchell dividend for the 2009/10 financial year of five cents per share.
Investors accepting stock, will receive 40 Aegis shares for every 67 Mitchell shares held. The agreement needs to be supported by a shareholder vote at a special meeting expected later this year as well. It must also gain court approval.
The bid is also subject to an independent review finding it's in the best interests of Mitchell shareholders.
Mitchell's plans
''Harold Mitchell, founder and chairman of Mitchell, intends to become a significant shareholder in Aegis and lead the combined Aegis Media Pacific business,’’ the companies said.
They said the acquisition of Mitchell accelerated the transformation of Aegis’ Asia-Pacific operations.
''Mitchell is the leading marketing communications group in Australia, the eighth largest ad spend market in the world, and this acquisition is a further step in transforming Aegis' operations in the Asia-Pacific region,'' Aegis Group chief executive Jerry Buhlmann said.
''Our businesses are a strong strategic and cultural fit.
''Combining Mitchell with our existing business in Australia will create a formidable business for the benefit of all our clients and position us for continued strong growth in the most dynamic region in the world.
''The proposed acquisition will be earnings accretive for Aegis and will enhance the return on invested capital in the first full year post combination.''
Mr Mitchell said he believed the deal was in the best interests of staff, clients and shareholders.
Mr Mitchell, a 30 per cent shareholder of the target, has pledged to not dispose of 85 per cent of the Aegis shares he will receive under the deal for a period of 24 months.
AAP, with BusinessDay, Bloomberg News