The E&P Financial Group Ltd (ASX: EP1) share price has gained a boost today, after the company received a full takeover offer. A bid to buy out the remaining shares of the embattled financial adviser came from its shareholder, 360 Capital Group Ltd (ASX: TGP).
At the time of writing, the E&P Financial share price is up by 3.13% to 66 cents, while the 360 Capital share price is down 1.04% to 95.5 cents.
What’s the offer
On 27 October, 360 Capital offered E&P 61 cents a share for 80.45% of the shares it doesn’t already own. This was rejected.
360 Capital made a fresh bid today, this time offering E&P’s shareholders 69 cents per share, a 13% increase on its first bid.
The offer has been structured at $0.30 per E&P share, plus 2 36o Capital shares for every 5 E&P shares or part thereof, less any dividends declared or paid after today.
E&P subsequently released an announcement through the ASX late this afternoon, telling its shareholders not to take any action until the board has issued its recommendations.
Why does 360 Capital want to take over E&P
360 Capital already owns 19.55% of E&P’s shares through its private equity subsidiary, 360 Capital ED1 Pty Limited.
In early October, 360 Capital sent a letter to its shareholders explaining why it had acquired 19.55% of E&P, and why it made a conditional offer to acquire the remaining shares.
In that letter, 360 Capital argued that E&P should be privatised. This would provide greater flexibility in managing its capital base, and a faster response to opportunities by removing the complexities associated with public listing.
In addition, 360 Capital noted that the E&P Financial share price had decreased by 79% since the company’s initial public offer (IPO) in May 2018. It believed a takeover would offer a compelling opportunity for E&P shareholders to realise part of their investment in cash, and also receive 360 Capital shares which would benefit from the potential turnaround of E&P.
About the E&P share price
E&P has been battling the Australian Securities And Investments Commission (ASIC) in court over 126 alleged breaches by company representatives. These relate to 51 instances of advice provided by its advisory business. ASIC said these breaches carried a maximum penalty of $1 million per instance before March 2019, and $10.5 million per instance after that date. The court case is ongoing.
The E&P Financial share price has lost 33% in 2020. The company currently commands a market value of $150 million.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- 4 small cap ASX dividend shares with large yields
- 360 Capital (ASX:TGP) share price edges higher on earnings forecast
Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post E&P Financial (ASX:EP1) share price lifts 3% on higher takeover bid appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/37OtXfo
Leave a Reply