Dorchester has confirmed the details of its acquisition of Turners Auctions – reporting an effective buy price of $82.1 million.
In the end it was only 1.8% of shares that needed to be compulsorily acquired after the deadline for acceptances ran out on November 24.
As to how it was funded, 51% was paid for in cash, 25% in bonds issued by Dorchester, and 24% in Dorchester shares. A total of 247 Turners shareholders now hold Dorchester shares,
Turners Group NZ Limited will now be delisted from the New Zealand Stock Exchange.
The current chairman of Turners, Michael Dossor, who represents the interests of Bartel Holdings, has been invited to join the Dorchester board. Bartel Holdings held just over 20% of Turners and accepted a consideration mix of Dorchester shares (60%) and bonds (40%) for their shares. Bartel Holdings now have a 7% shareholding in Dorchester.
Dorchester chief executive and director Paul Byrnes says Turners will continue to operate autonomously under the leadership of chief executive, Todd Hunter.
“However, it makes no sense to have two listed entities, and delisting will result in cost savings of around $500,000 per annum,” Byrnes explains. “Michael and I have been directors of Turners so there should be adequate board continuity on operational aspects and governance cover.
Byrnes has already acknowledged that the group will potentially pick up the Turners name for the whole company.
“Dorchester directors are considering the merits of a group name change.”
Dorchester last week advised a higher forecast trading net profit before tax of $14 million for the current financial year as a result of the inclusion of 4 months of full profit contribution from Turners. In addition, there will be abnormal profits of between $3.5 million and $4 million for this period to March 31, 2015.
The Company earlier advised that should the Turners takeover proceed; profit before tax for the year to March 31, 2016 would be between $20 and $25 million. With the full ownership and control of Turners achieved, it is now expected that profit before tax will be around $23 million.
Following the issue of new capital, shareholder funds of Dorchester Pacific are approximately $114 million, with this expected to increase to $120 million by 31 March 2015. Total assets at 31 March 2015 are forecast to be around $265 million.
Byrnes says the takeover ran incredibly well.
“The acquisition of Turners could really not have gone any better,” he says. “Swiftly achieving 100% ownership allows us to focus immediately on growth initiatives and synergies we believe will be realised.
“The higher take up of shares and bonds has resulted in lower bank borrowings.”
No big changes to Turners are imminent.
“We are comfortable with Turners general strategic direction and management of the business, so there is no need to pause while we integrate Turners into the group,” he says. “We are therefore continuing to remain active in the evaluation of opportunities that could add further growth either specifically for the Turners business or for the Dorchester group.”
