Mariner Corporation will continue its takeover of the Austock Group after shareholders expressed frustration about the poor performance of their shares and company management.
A day after the chief executive of Austock called on the listed corporate investment firm to withdraw its offer, Mariner informed the market of its intention to proceed.
"Mariner has been contacted by Austock shareholders who would like Mariner to get on with its offer, so that they can sell their Austock shares to Mariner," the Mariner board said in a statement to the Australian Securities Exchange last night.
"Austock shareholders who have contacted us have expressed frustration about the poor performance of their Austock shares over a long period of tome, and have expressed concerns that the old management team is now back in control of Austock."
On Monday, Austock chief Bill Bessemer urged the Mariner board to withdraw its bid, stating the deal was "fundamentally flawed".
The offer had the potential to proceed if Mariner addressed four key concerns, Bessemer said.
Mariner's failure to obtain approval under the Insurance Acquisition and Takeovers Act 1991, the Financial Sector (Shareholdings) Act 1998 and the Pooled Development Funds Act 1992 before announcing its offer to the Australian Securities Exchange (ASX) was among the concerns, he said.
Austock also claimed the company's initial offer price of 10.5 cents was "in breach of the takeover provisions" of the Corporations Act 2001 because the company acquired Austock shares on the ASX at 11 cents per share during the four months prior to the bid.
Since making its initial bid late last month, Mariner has increased its offer for Austock to 11 cents per share.
Austock also said the terms of the offer "undervalue" the company, and it raised questions as to how Mariner would fund a cash bid of more than $14 million.
Mariner said all of Austock's concerns are being "dealt with", and stated it was not unusual for companies in Austock's position to use "technical hurdles" to attempt to block bidders.
"It is not unusual for target companies to seek to use technical hurdles, and raise regulatory and procedural issues, in their defence against takeover activity, and Mariner will not be deterred by that," the company said.
In May this year, Bessemer, Austock's former chair was named the company's new chief. Bessemer replaces former Austock Group managing director and chief executive Paul Masi.
Masi resigned from his post earlier this year following the sale of Austock's securities business to Intersuisse Holdings. Masi now heads up the combined Austock Securities/Intersuisse Holdings group.
Since assuming the chief reigns, Bessemer and the Austock board has undertaken cost-cutting measures at the group level.
Austock's core business now rests with its $850-million funds management units: Austock Services, Austock Property and Austock Life.
Austock Property, led by Nick Anagnostou, manages $558 million across four funds, while Austock Life continues to expand under Ross Higgins, with funds sitting at $295 million as at 30 April.
