Mark Bouris slams Mercantile’s “grossly inadequate” Yellow Brick Road takeover bid
Link copied to
Yellow Brick Road chairman Mark Bouris has slammed a low-ball takeover bid from corporate plunderer Mercantile Investments, calling it “grossly inadequate” and firmly warning shareholders to reject it.
Mercantile, helmed by serial corporate raider Sir Ron Brierley, offered Yellow Brick Road (ASX:YBR) shareholders 9c a share for a bid totalling $25.4 million in cash. The shares were trading at 10c this morning.
Mercantile owns 19.97 per cent already, a stake it began building in November 2016.
Mercantile told investors in a bidder’s statement released to the ASX that it was “disappointed” by the financial performance of Yellow Brick Road and could delist the company if it gains control.
Mr Bouris, known as the Australian host of TV’s The Apprentice, penned a letter to investors today telling them in no uncertain terms to reject Mercantile’s bid and “ignore all correspondence and phone calls” regarding it and warning shareholders of the consequences of accepting it.
“If you accept Mercantile’s offer, you will lose the option to participate in any subsequent superior offer for your YBR shares from any third party should one emerge,” he said.
Mr Bouris pointed out Yellow Brick Road’s shares had traded “consistently higher than Mercantile’s offer price since the takeover bid was announced”.
“It does not reflect YBR’s full value relative to peer market valuation nor any control premium typically paid to shareholders in comparable takeover transactions.”
Both Yellow Brick Road and Mercantile’s shares were flat on the news this morning.
He pointed to the company’s results for the 2018 financial year and future outlook — which showed slightly increased revenues of $227 million but a $658k loss compared to a $1m profit in 2017 — saying shareholders who remained patient would see greater returns.
“Mercantile’s inadequate and opportunistic takeover bid would deprive shareholders of the full strategic value of their investment,” Mr Bouris said.
“YBR posted on the ASX its FY18 results together with its strategy and potential for future growth and the YBR directors believe this strategy will deliver greater benefit to shareholders.”
Mercantile declined to comment.
The investment company’s last takeover offer, for Bauxite Resources, failed miserably.