Mercantile falls short in takeover bid for Ask Funding, getting 72%

Veteran corporate raider Sir Ron Brierley's Mercantile Investment [NZX: MVT] has fallen short in its bid to take over ASX-listed Ask Funding, getting 72% of its shares despite having sweetened the deal to shareholders and win over the target's board.

At the offer's close last Friday Mercantile secured 71.74% of Brisbane-based Ask Funding, it said in an announcement. Last month the takeover was recommended to shareholders by Ask Funding's board after the offer was lifted to A8c per share from an earlier offer of 7Ac. The shares last traded on the ASX at 8Ac.

With the majority stake, Mercantile will now review Ask Funding's strategy, look to take control of the board, and also seek to delist the company from the ASX. If Ask Funding achieves profitability, Mercantile said it would review the dividend policy. The investment vehicle may also acquire further shares.

Ask Funding has been winding down its businesses since 2011, servicing loan books to repay Bank of Western Australia, with a view to distributing surplus funds to shareholders.

Mercantile already owned 19.9% of Ask Funding when it launched a takeover bid at the start of July, saying the offer provided it with certainty against the risks of trying to realise the remainder of the loan book.

The firm is at least the third diversified investment vehicle for Sir Ron, who built Guinness Peat Group after being forced out of Brierley Investments in the early 1990s. The group named for him struggled to recover from the 1987 share market crash and now exists as GuocoLeisure, with its primary listing on the Singapore stock exchange.

Sir Ron seized control of ASX-listed Mercantile, then called India Equities Fund, in 2012 when shareholders agreed to a deal giving him 54% of the company and its chair in return for his stakes in Copper Strike, Trinity Group, ING Community Living Group, Australian Pharmaceutical Industries and Trojan Equity.

The holding has since been watered down to 46% after Mercantile completed a takeover of Murchison Metals via a scheme of arrangement, which let investors take either cash or shares. Since then, he brought in his old comrades Ron Langley and Gary Weiss via a $A2 million placement.

The company has since added a secondary listing on the NZX, where its shares last traded at 15.8c.

(BusinessDesk)