M&A: Wilson Asset Management leading a three-way ASX LIC merger
As big as the M&A has been in 2021, most have been two-company engagements. But WAM Capital (ASX:WAM) bucked the trend this morning, with the announcement of a three-company deal.
The Wilson Asset Management backed Listed Investment Company (LIC) announced it was purchasing Westoz Investment Company (ASX:WIC) and Ozgrowth (ASX:OZG).
Although both companies will be bought in separate transactions, the three entities will ultimately operate as one.
WAM Capital will pay in its own shares at a price that will be determined on the ratio of the VWAP (volume weighted average price) of WAM Capital on the calculation date (March 31, 2022) and a 7.5% premium to the pre-tax NTA (net tangible assets) of both companies. Currently, the consideration is estimated to be ~$271.5 million.
The LIC sector has reached $24.4 billion in size, up 78% from five years ago. Wilson has been one of the most prominent LIC operators and its WAM Capital LIC has increased its underlying net assets by over $360 million.
WAM Capital says if the deal goes through it will have net assets of ~$2 billion and a market capitalisation of over $2.3 billion and this deal will, like transactions before it, strengthen the sector as well as individual funds.
The board promised the fund would garner additional interests from broker and financial planners as well as offer shareholders greater liquidity and lower management expenses.
It also promoted Wilson’s track record since 1999 in having paid $1.2 billion in dividends and franking credits in the WAM Capital fund alone.
“The growth of the LIC sector through corporate activity has strengthened the industry, creating economies of scale, providing opportunities for smaller players to grow and delivering liquidity to investors,” said Wilson boss Geoff Wilson.
Both Westoz and Ozgrowth rose off the back of the three way M&A deal although Ozgrowth was easily the bigger winner gaining over 20% and has gained over 50% in the past year. .
WAM Capital was unchanged this morning and is also unchanged on a 12 month basis.