YBR shareholders told to reject takeover offer

On 22 August, Mercantile OFM (a wholly owned subsidiary of Mercantile Investors, a business chaired by Sir Ron) announced an offer to take over Yellow Brick Road at 9 cents a share, representing a discount of 3.2 per cent at the time.

Yellow Brick Road (YBR) executive chairman and founder Mark Bouris told ifa the offer was “opportunistic” and “materially undervalues” the company.

Yesterday, YBR sent a letter to shareholders that described the Mercantile OFM offer as “grossly inadequate” and recommended shareholders reject the offer.

“Mercantile’s inadequate and opportunistic takeover bid would deprive YBR shareholders of the full strategic value of their investment,” the letter said.

“Mercantile’s offer of $0.09 per YBR share does not reflect YBR’s full value relative to peer market valuations, nor any control premium typically paid to shareholders in comparable takeover transactions. The price of YBR shares on the ASX has traded consistently higher than Mercantile’s offer price since the takeover bid was announced.”

In a statement posted to the ASX last week, YBR reported a net loss of $0.7 million in the 2017-18 financial year, which Mr Bouris said was reflective of the impact of “APRA-induced regulation changes and the background of the royal commission” on the industry.