WAM Leaders has flagged its intentions to create a single listed investment company with a larger capital and shareholder base through the acquisition of QV Equities.
In an ASX announcement on Tuesday, the firms confirmed a proposal for WAM Leaders to acquire 100 per cent of the shares in QVE through a scheme of arrangement.
WAM Leaders had previously announced its intention to make an off-market takeover bid, subject to certain conditions, in January. It argued QVE’s investment portfolio has underperformed since listing in 2014 and such an offer would “provide QVE shareholders with the opportunity to be invested in one of the largest listed investment companies on the ASX”.
Under the proposed scheme, QVE shareholders will receive new WAM Leaders shares as consideration for their QVE shares, with the number to be determined by a formula based on the pre-tax net tangible assets (pre-tax NTA) of WAM Leaders and QVE on the calculation date.
WAM Leaders and QVE have also agreed to provide QVE shareholders the option to receive cash for their QVE shares at a 2.5 per cent discount to the pre-tax NTA of QVE on the calculation date, or a combination of the two considerations.
The scheme includes a number of customary clauses and is subject to conditions precedent including QVE shareholders approving the scheme in accordance with the Corporations Act 2001, the independent expert concluding that the transaction is in the best interests of QVE shareholders, and the Federal Court approving the scheme.
QVE shareholders will be given the opportunity to vote on the scheme at a meeting slated for June 2024.
With the transaction, WAM Leaders shareholders are expected to benefit “from access to greater on-market liquidity through a larger market capitalisation of almost $2.0 billion with approximately 30,000 shareholders”, according to the ASX announcement.
On a pre-tax NTA basis, this is forecast to increase WAM Leaders’ net assets by approximately $238.8 million as at 8 March 2024.
Geoff Wilson, WAM Leaders chairman and chief investment officer, said the board was confident the scheme would deliver benefits to shareholders.
“This expansion will further enhance WAM Leaders’ size and relevance in the market, leading to increased access to market opportunities,” he stated.
Additionally, the firm highlighted that the acquisition would provide a lower management expense ratio as a result of the removal of duplication of expenses such as ASX listing fees, share registry fees, audit fees, compliance costs and other public listed company costs, as well as a larger pool of assets across which to spread expenses.
