Asking shareholders to back a new board after a rough debut year was always going to be a tough ask for Automotive Solutions Group.

On Tuesday night, the board (ASX:4WD) bowed to the inevitable and recommended shareholders accept crash repairer AMA’s 35c a share offer.

A week ago AMA’s (ASX:AMA) stake in the business rose from 36 per cent to 60 per cent, giving it majority control anyway. It now owns 62.87 per cent.

The independent expert’s report said a fair price was between 6c and 32c a share.

“We took our time and reviewed the position,” chairman Kenneth Carr told Stockhead.

“In the end we believed that we couldn’t achieve better value for shareholders in the short to medium term, and as true independent directors, we had to recommend to accept the offer as in the best interests of shareholders and it is a fair and reasonable outcome.”

Mr Carr only joined in the dying days of October, just before AMA launched what would be its second bid for the company. The first was in May.

Automotive’s share price fell off a cliff at the end of April after it downgraded second half profit guidance from EBIT of $3.3 million to a range of $800,000 to $900,000.

Shares plummeted from above 75c.

AMA swooped in days later with an opportunistic 35c bid.

You can see why shareholders might be ready for someone new

No quick fix

In their acceptance document, the board said a takeover was the only way to solve Automotive’s financial problems.

“The directors, in their review of the ASGL’s business following their appointment a month ago, have not identified any quick means of fixing ASGL’s current performance issues,” they told shareholders.

“The turnaround strategy being implemented by management involves many incremental adjustments to ASGL’s performance.

“ASGL also has cash flow requirements which are likely to require additional funding for the group over the next six months.”

Second time lucky

AMA initially justified its second bid by citing poor financial and board disunity.

Automotive only listed in December last year but changed its CEO and CFO, gained and lost chairmen twice this year and had, according to AMA, “engaged multiple apparent turnaround specialists and contractors”.

AMA said there were “two warring factions fighting for control of the board with two extraordinary general meetings to be held at different times on 13 November 2017 and in different locations”.

It then had to change its justification when Automotive fixed the above problems with a new board.

It fretted in mid-November that the new board didn’t truly know Automotive the way they did.

A final nail for Automotive came last week when it was forced to ask for a $3.5 million loan from AMA to cover an urgent tax debt.

The debt was $2.5 million – they had $1.2 million left in the bank at the start of the December quarter.