Pepper has officially pulled out of the bid war over RHG, following a media release in which RHG confirmed it had reached agreement with the Resimac Syndicate on the key terms of a revised offer which included an increased cash offer to all RHG shareholders of 50.1 cents per share.
“In the interests of providing certainty to all of RHG’s shareholders, many of whom have supported the company since its initial ASX listing in 2007, Pepper and Cadence Capital Limited have decided to withdraw their offer,” says Pepper co-group CEO, Patrick Tuttle.
“Despite our belief that the Pepper offer remains clearly superior to the revised offer made by the Resimac Syndicate last Friday [October 18], the RHG Board has decided to approve it within three days of its receipt, despite having been in possession of the latest Pepper Offer since September 6.”
Tuttle adds that, over a period of nearly six weeks, the RHG board made no attempt to engage with Pepper in any ‘meaningful’ way.
“In fact, Pepper has not once met with any of RHG’s independent directors since competition for control of the company began over six months ago,” he says.
Tuttle’s fellow co-group CEO, Mike Culhane, says the company can only assume that by increasing its cash offer to 50.1 cents per share, the Resimac Sydicate was of the opinion that the Pepper offer was superior to their previous offer.
“It is inconceivable that, for close to six weeks, the RHG Board was in receipt of a superior proposal but failed to take any positive steps to explore whether agreement could be reached on the terms of our proposal. Yet, surprisingly, they were able to promptly respond, within three days, of receiving the revised offer from the Resimac Syndicate”, says Culhane.
Tuttle says the only assumption the Pepper Syndicate can draw from the situation is that the RHB board was solely interested in doing business with the Resimac Syndicate.
“On this basis and given our view that the economic value to Pepper of RHG’s loan book has materially deteriorated due to the prolonged period of time taken by the RHG Board to bring this process to a successful conclusion, we have no alternative but to withdraw our offer…We believe that Pepper will be better served by focusing on our own direct origination strategy in prime residential mortgages in Australia.”
Culhane adds that Pepper is currently reviewing ‘a range’ of potential investments across both Australia and Europe.
“So we feel our time and resources will be better utilised in focusing on these alternative opportunities.”