Diversified financial services company MMC Contrarian has recommended shareholders do not accept a bolstered takeover bid from investment holding company Guinness Peat Group (GPG).
GPG raised the offer price under its on-market takeover bid for MMC to 50 cents a share from 48 cents a share and declared the increased offer price final on 16 October 2009.
"The independent directors of MMC continue to recommend that shareholders do not accept the increased, final GPG offer by selling shares at 50 cents," MMC said.
However, MMC said shareholders who wished to take advantage of the liquidity afforded by the increased GPG offer of an unconditional cash price for all shares may consider selling their shares for the best price available on the market.
MMC said the reasons which it set out on 16 September 2009, when it first advised shareholders to reject the bid at 48 cents a share, were still materially applicable to the new offer.
In particular, MMC said the 50 cent offer price continues to represent a discount per MMC share of 12 per cent to cash backing, 13 per cent to net tangible assets before tax and 23 per cent to net assets before tax.
MMC had $78.9 million in cash reserves and no interest bearing debt as at 30 June 2009, MMC said in September.
GPG, chaired by Ron Brierley, is currently MMC's largest shareholder with a stake of nearly 30 per cent.
The company first made its takeover bid for MMC on 8 September 2009.
At the time, GPG said should it own at least 90 per cent of MMC's shares, it will conduct a strategic review of MMC and will be entitled to acquire any outstanding shares and therefore acquire the whole company.
"GPG intends to conduct a strategic review of MMC's assets and operations to evaluate their performance, profitability and prospects in light of the more detailed information then available to it and will then implement any steps which it considers necessary to maximise the value of MMC," GPG said on 8 September.
GPG said at the time it will also review all senior employment positions in MMC to determine whether MMC is properly staffed to take it forward following the review.
MMC subsidiary ComCorp Financial Advice on 13 July acquired a 40 per cent stake of Berry Financial Services, a financial planning practice founded and owned by FPA chair Julie Berry.
In the same month, MMC sold its funds management unit and on 14 August reported a net loss of $4.7 million for the year ended 30 June.
