Godfreys Group Limited (ASX: GFY)
Conditional off-market takeover offer by key substantial holder: Arcade Finance Pty Ltd, a substantial holder of the Company changed its substantial holding on 23 February 18. Initially it was holding 11,094,595 shares and 27.32 per cent of the voting power, and after a change, it holds 11,494,595 shares with 28.09 per cent of the voting power. Arcade has proposed to make a take-over offer for all the shares of Godfreys at a price of $0.32 per share in cash. Godfreys shareholders, if they accept the offer will be paid within one month after the offer becomes or is declared unconditional or within 21 days after the end of the Offer period whichever is earlier. As per Arcade, the offer looks to be an attractive one and represents a compelling value for Godfreys shareholders. It is a prospectus offer in terms of Godfrey’s continued long-term share price decline. Arcade believes that the restructuring which is required to restore Godfreys’ value would be best carried out in an un-listed private company environment, so Arcade proposes to remove Godfreys from the ASX’s official list after the acquisition so that Godfrey can get the best opportunity to restore its value. Financial Performance of Godfrey has been deteriorating as the revenue and EBIT for 1HFY18 were 8.9 per cent ($84,166,000) and 62.0 per cent ($1,510,000) below the figures noted for 1HFY17. Dividends have declined year on yearand Board postponed its interim dividend for FY18.
Meanwhile, the Board of Godfreys has asked shareholders to not take any action in respect to this unsolicited offer. Directors will carefully consider the proposal and will appoint an independent expert which will provide a fair opinion that whether the offer is reasonable or not. The Company will provide to the shareholders a Target Statement within the required period after the release of Arcade’s Bidders statement which will include the independent expert’s report and the Board’s recommendation on the Offer. Since the release of 1HFY18 results, the share price of Godfreys has declined by 34.4 per cent. It is expected that the share price might fall further if the offer is not supported by its sufficient shareholders. After the announcement of the offer, the share price went up by 37.21 per cent in the past five days (as at April 10, 2018). We maintain a “Hold” recommendation at the current price of $ 0.300.
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GFY and XAO comparative price performance (Source: Company Reports)
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