Dorchester Pacific, the finance company, has reached the 90 per cent threshold in its takeover of Turners Group, allowing it to mop up remaining shares in the car auction firm.
Dorchester offered Turners' shareholders either $3 a share in cash, two-year notes that pay interest of 9 per cent and convert to Dorchester shares, ordinary shares of Dorchester, or any combination of the three.
The finance company wants the car auction house to complement its loan book, of which 70 per cent is made of car loans, while the focus of its insurance business is also car related. Dorchester already held 19.85 per cent of Turners when it entered into a lock up agreement with the target company's chairman, Michael Dossor, who owns 20.8 per cent through Bartel Holdings, for a combined 40.65 per cent stake.
In September, Dorchester said a full takeover of Turners would be funded by $18 million of bank debt, $18 million of bonds, and $30 million from the issue of new shares.
The Turners board endorsed the $82 million bid by Dorchester, saying the $3 a share offer was within the valuation range of between $2.97 and $3.27 put forward by Grant Samuel in its report. The report said the 9.1 per cent premium to Turners' pre-offer trading price was lower than the average incentive offered in successful takeovers of Australian and New Zealand listed firms. But it said no other offer had been made, the finance company already held about 41 per cent of the firm's shares, and if the offer was not successful, the Turners shares would likely trade below the $3 price.