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Final update on offer for CIP Merchant Capital

Corporation Financiere EuropeenneSA (CFE) has provided a final offer update on its cash offer for CIP Merchant Capital (CIP); an offer that CIP’s board has previously rejected, having described it as “Highly opportunistic” – click here to read our article from 23 March 2022 which covered the rebuttal of this final offer. Separately, CIP’s board has issued a response saying that, as at the time of CFE’s announcement, it did not have sufficient acceptances to unilaterally seek a cancellation of CIP’s ordinary shares from trading on AIM. CIP’s board also said that it remains of the view that CFE’s final offer undervalued CIP’s current investment portfolio and the Company as a whole and, accordingly, the Board’s recommendation to Shareholders to reject the final offer remains unchanged.

Background

On 14 January 2022, CFE unconditionally agreed to acquire 1,091,000 CIP shares, at a price of 55p per share, from a single shareholder. As a result of this purchase, under Rule 9 of the Takeover Code, CFE was required to make a mandatory cash offer for any CIP shares at 55p per CIP share. The full terms of the original offer, and the procedures for acceptance, were set out in the offer document dated 31 January 2022. On 16 March 2022, CFE announced the terms of an increased and final cash offer for the CIP Shares of 60p per CIP share (a document that set out the improved terms was published and posted to CIP Shareholders on 18 March 2022).

Offer Update – 50% threshold passed 

CFE has announced that, as at 1.00 p.m. on 31 March 2022, it had valid acceptances of its increased offer for 2,312,586 CIP Shares. In addition, CFE holds 27,149,621 CIP Shares and so, in aggregate, CFE either owns or has received valid acceptances in respect of 53.56 per cent. of the issued share capital of CIP.

Offer has become wholly unconditional

CFE says that as at 1.00pm on 31 March 2022, CFE either owns, is interested in or has received valid acceptances in respect of, a total of  29,462,207 CIP shares (representing 53.56 per cent. in aggregate of CIP’s issued ordinary share capital) and so its offer has become unconditional in all respects. In the original offer document, CFE stated that, if the increased offer were to be declared unconditional in all respects, in accordance with its terms, it would terminate the existing investment management agreement. CFE has now said that it will be engaging with the Board of CIP further on these matters.

Closing date extended

CFE has said that the offer is being extended and will remain open for acceptance until the final closing date which will be 1.00pm on 15 April 2022. It urges CIP Shareholders who have not yet accepted the increased offer to do so by the following deadlines:

  • If you hold CIP Shares in certificated form (that is, not in CREST), you should complete and return the Form of Acceptance as soon as possible and in any event so as to be received by the Receiving Agent at Link Group, Corporate Actions, Central Square, 29 Wellington Street, Leeds LS1 4DL no later than 1.00 p.m. on 15 April 2022.
  • If you hold your CIP Shares in uncertificated form (that is, in CREST), you should ensure that an electronic acceptance is made by you or on your behalf and that settlement is made no later than 1.00 p.m. on 15 April 2022.

Full details on how to accept the increased offer are set out in the original offer document and the increased offer document, copies of which are available on CFE’s website at https://cfe-finance.com/public-documents/.

Current acceptances are not sufficient to cancel AIM listing

CIP’s board has issued a response to the announcement that the offer has become unconditional. The key takeaways are as follows:

  • As at the time of CFE’s announcement earlier today, the current level of CFE’s holding of CIP’s ordinary shares, combined with the ordinary shares in respect of which acceptances in relation to the final offer have been received, was not sufficient for CFE unilaterally to seek to effect a cancellation of CIP’s ordinary shares from trading on AIM as part of the Final Offer.
  • The Board says that it remains of the view that CFE’s final offer undervalued CIP’s current investment portfolio and the Company as a whole and accordingly the Board’s recommendation to Shareholders to reject the final offer remains unchanged.
  • The Board’s Final Response Circular setting out its rationale for rejecting the final offer is available on the Company’s website at: www.cipmerchantcapital.com.
  • As the final offer has now been declared unconditional in all respects, the Board will seek to liaise with CFE to discuss CFE’s intentions in relation to the Company’s strategy, the continued quotation of the Company’s ordinary shares on AIM and the composition of its Board of directors. In addition, the Board will seek to discuss CFE’s intentions with respect to the Company’s investment manager, in light of its indication that it will seek to replace the Company’s investment manager in its original offer document of 18 March 2022.

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