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Date : 27/07/2022

MACA (ASX: MLD) receives Takeover Bid for $1.025 a share

MACA Limited (ASX: MLD), the mining services specialist, has received a takeover offer for $356 million from Thiess, which is jointly owned by Spanish-controlled construction company CIMIC and the US hedge fund Elliot Management. The offer is all cash and values each MLD share at $1.025.

The bidder has already done due diligence and secured the MACA board’s approval, subject to clearance from an independent expert.

The $1.025 bid represents a 28.1% premium to the last close and a 37.4% premium to the three-month VWAP. The offer thus delivers a substantial premium to MACA shareholders.


Source: Tradingview.com

MLD shares are currently trading at $0.99 a share following the takeover offer. Since our first recommendation at $0.73, it represents a 35.6% upside.

The Directors of MACA recommend that MACA shareholders accept the offer in the absence of a superior proposal and subject to the Independent Expert (to be engaged by MACA to opine on the offer) concluding and continuing to conclude that the offer is fair and reasonable to the MACA shareholders.

The next steps will therefore involve the verdict from the Independent Expert. If there is a positive response and MACA shareholders accept the offer, there will be a further upside as MLD shares will surge ahead towards the offer price of $1.025.

From the current price level, this would mean approximately 3.5% upside.

If the Independent Expert concludes that the offer is not fair and MACA rejects the bid, a failed takeover may result in MLD being sold-off in the markets.

Given the risk-reward ratio on the table, and considering the $1.025 offer is a fair price, we believe it is time to cash-in.

Dividends for FY22

As part of the takeover offer, MACA is permitted to declare and pay a dividend of up to 2.5 cents per share. The MACA Board has not yet determined whether or when such a dividend will be declared or paid.

In the event MACA does pay such a dividend, MACA and Thiess have acknowledged and agreed that, under the terms of the offer, the Offer Price will be reduced by the amount of the dividend (but will not be reduced by the value of any franking credits in relation to the dividend).

Recommendation

The Board has accepted the takeover offer of $1.025 and has urged MACA shareholders to accept the bid. If accepted, MACA shares will continue to advance toward the offer price, and gain an additional 3.5%. On the other hand, if the Independent Expert analysing the offer decides it is not fair, MLD shares can be sold-off due to a failed takeover.

MLD has returned 35.6% to members since our initial recommendation. The offer price represents a fair value for MLD shares and given the risk-reward ratio, we recommend investors to ‘Sell’ and book profits.

 

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