Accept the WeBuyRMH bid, says independent board 

Not fair, but accept it. That, essentially, is the view of RMH’s independent board regarding AttBid’s 47c-a-share offer for all the RMH shares it does not currently own (about 58%).

The Companies Act requires the independent board to give an opinion on whether it believes the offer, from a consortium comprising Atterbury’s Louis van der Watt and the Van der Walt brothers who control WeBuyCars, is fair and/or reasonable. In the just-released circular to shareholders the board states the offer is reasonable, but not fair.

The circular was released a few weeks later than touted by Atterbury Property Holdings director Gideon Oosthuizen at RMH’s recent AGM. And it leaves two key issues open-ended.

First, it hints at the possibility of the offer price being increased, and says the offer may be amended with the consent of the Takeover Regulation Panel “as long as there is no diminution in the value of the offer”.

Because this is a mandatory offer, any increase would only apply to shareholders who sold to AttBid in terms of the offer that opened on April 9. Any shareholder who sold to AttBid in the market at 47c over the past several months will not get a top up if the price is raised.

The second open-ended issue is the closing date. The circular states that shares tendered to AttBid in terms of the offer will not be accepted until all regulatory approvals have been received. This means the closing date could be extended from the current May 29 while approval is awaited.

Given this uncertainty, it’s difficult to see why shareholders would take up the offer before AttBid receives regulatory approval.

As for the lack of “fairness”, the RMH independent board explains that “a transaction will generally be considered to be fair to a company’s shareholders if the financial benefits received as a result of the transaction are equal to or greater than the value forgone”.

No control premium

The independent board considered many factors, but appears to have been swayed by the fact it was at the lower end of the independent expert’s (Investec’s) fairness range of between 47c and 53c. Furthermore, says the independent board, the offer does not reflect a control premium.

Despite its reservations about the fairness of the deal, the independent board “is of the opinion the acquisition is in the best interests of RMH shareholders and accordingly recommends that RMH shareholders accept the offer”.

The chief reasons for recommending the AttBid offer are that the board has received no other compelling offers that would enable shareholders to monetise their investments; in addition, the protections of minority shareholders could be prejudiced under the new controlling shareholders.

The potential for prejudice seems largely due to the fact the current board has given notice it will be quitting once the deal is closed on May 29. In which case, “a newly constituted RMH board may resolve to shift RMH’s strategy from asset monetisation to an investment-focused strategy that may give rise to future capital requirements and delay any liquidity to RMH shareholders”. The old board will resign regardless of any extension to the closing date.

In other words, a dividend squeeze. This was raised by Oosthuizen at the AGM in March. While he stressed he had not been instructed by the Atterbury Group and was talking on his own behalf, Oosthuizen warned RMH shareholders that given perceived future capex requirements, funds would unlikely be available to pay dividends in the future.

He also assured shareholders there would be no increase in the 47c offer.

Still, minority shareholder Albie Cilliers, who owns about 15% of RMH said on X: “I’m NOT selling my RMH shares” at the “low-ball” offer.

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• Atterbury plays it cool on RMH buyout
• Atterbury’s bid to delist RMH is no sure thing

_{Top image: Faan de Walt: webuycars.co.za. Graphic: pexels-pixabay/Currency collage.}