The battle for control of holiday accommodation group BreakFree has hotted up with the group's directors urging shareholders to reject S8's cash offer of $1.51.
According to BreakFree chairman Terry O’Dwyer, BreakFree shares are worth far more than what S8 is presently offering, and this week backed his view with an independent report by Grant Samuel.
The Grant Samuel report comes at the same time S8 moved to a 22.6% stake of BreakFree.
The Grant Samuel report claims BreakFree shares are worth up in a range from $1.67 to $1.93 – up to more than 28% more than the S8 offer.
In its report Grant Samuel claim: “The true value of BreakFree to S8 could even by materially higher than that range if synergy benefits claimed by S8 from the acquisition of Break Free existed.”
According to O’Dwyer, the directors do not presently intend to accept the S8 offer for any shares held by them although they have reserved the right to do so if the circumstances change.
Shares held by BreakFree directors represent 30% of the company.
“The directors commissioned a report from the independent expert Grant Samuel as to whether the S8 offer was fair and reasonable,” O’Dwyer told propertyreview.com.au. “The Grant Samuel report concluded that the S8 offer is neither fair nor reasonable.”
“If BreakFree shareholders were to accept the offer price they would be allowing S8 to benefit at their own expense,” O’Dwyer concluded.
The grant Samuel report added: “In the absence of a counter bidder, BreakFree shareholders’ only leverage is to not accept the S8 offer (recognising that this involves risks).”
BreakFree directors poured doubt on whether S8’s capital raising to fund its offer would be successful stating: “If the capital raising is unsuccessful, it is likely that S8 will not be able to fund its offer, even though some shareholders may have accepted it.”
According to S8 chairperson Jenny Hutson the cash offer of $1.51 is excellent value given that BreakFree shares have traded at an average of only $1.01 for the two months leading up to S8’s acquisition of shares.
“The $1.51 represents a 49% premium to BreakFree’s weighted average share price for the 38 trading days up to July 3rd this year,” Hutson stated.
