JBS offering 4.5% premium for a controlling stake. Photo / Supplied
JBS offering 4.5% premium for a controlling stake. Photo / Supplied
Brazilian meat processor JBS is offering a 4.5 per cent premium to buy a controlling stake in industrial automation manufacturer Scott Technology as part of a capital raising to cut the Dunedin company's debt levels.
JBS Australia, an existing Scott customer, has put forward an offer to merge with Scottvia a scheme of arrangement, which requires 75 per cent shareholder approval, where it would buy 10 million shares at $1.39 apiece and offer to pay existing investors the same price.
That would be followed by a one-for-eight non-renounceable rights issue at $1.39 for shareholders who didn't want to be diluted, then a further placement to give JBS 50.1 per cent of the firm. That's a 4.5 per cent premium to the $1.33 price the shares traded at before the announcement.
Chairman Stuart McLauchlan and chief executive Chris Hopkins said Scott had previously told shareholders it was considering a capital raising to cut debt after recent business acquisitions and to provide working capital to fund further growth.
"After considering the company's size and level of institutional interest in Scott, the company believed our growth aspirations would be best achieved with a relevant industry-based cornerstone investor."
Scott had net debt of $24 million in February after a series of buys in recent years, the latest being Australian business Machinery Automation and Robotics for A$13 million ($14.44 million) this year.
The placement would raise $13.9 million and if no shareholders sold to JBS, a further $7.9 million would be raised through the rights issue, meaning the Brazilian firm would have to pay a further $69.5 million for about 50 million more shares to get a controlling stake.
Scott's board is hiring an independent adviser to prepare its report on the merger, and the various regulatory approvals are expected to take several months to complete.
