New Image directors reject takeover offer
The independent directors of bovine colostrum health tonics company New Image Group have recommended that investors do not accept a takeover offer from the firm's largest shareholder.
Graeme Clegg, who holds just under 70 per cent of New Image's shares and is chairman of the firm, has launched a takeover bid with the aim of de-listing the company.
High compliance costs for listed firms, negative media attention and low liquidity meant privatising the company was "compelling", he said.
"In simple terms, New Image has no need for further capital, is too small, has too few shareholders, and its shares trade too infrequently for it to remain as a listed vehicle, " Clegg said last month.
Today New Image told the NZX it had received notice that the offer documents from Clegg's takeover vehicle, New Image Trustee Limited, had been dispatched.
It had sent the Target Company Statement and Independent Adviser's Report to shareholders.
The Target Company Statement contained a unanimous recommendation from the independent directors that shareholders do not accept New Image Trustee's offer, it said.
Clegg is offering shareholders 26 cents per share, valuing the firm at $61.1 million. New Image shares last traded at 28c.
An independent advisers' report by Simmons Corporate Finance has valued the company at 35c to 42c per share, significantly above the offer price, the independent directors said.
However, shareholders should carefully consider the information in the documents and in particular should consider the independent advisers' report before making a decision, they said.
Late last year New Image forecast a big turnaround in full-year earnings, with pre-tax profits expected to come in at between $12m and $14m, up from a pre-tax loss of $4.8m in the previous year.
The offer, which closes on April 2, is conditional on Clegg gaining a 90 per cent acceptance rate from shareholders.
The firm first entered the share market 13 years when Selector Group acquired the New Image business from Clegg, and subsequently renamed itself.