The Terry White Group’s independent directors have decided to recommend accepting EBOS’ proposal to acquire all the shares it does not currently own
TWG’s decision to recommend the move was unanimous, it said in a statement today.
If the transaction goes ahead, EBOS PH Pty Ltd will acquire all the ordinary shares in TWG which it or its related bodies corporate do not already own, for cash consideration of $3.55 per share.
This would take place via a scheme of arrangement.
EBOS and TWG say that the move will enable TWG and the TerryWhite Chemmart pharmacy network to achieve the scale and strength required to fulfil its potential to become Australia’s pre-eminent health-focussed retail pharmacy brand.
Each of the Independent Directors have concluded that the Scheme is in the best interests of TWG and the TWG shareholders and recommends that TWG shareholders vote in favour of all resolutions to be proposed at the shareholder meeting to approve the scheme.
The Independent Directors’ recommendation is subject to no Superior Proposal emerging and also subject to the independent expert concluding that the Scheme is in the best interests of TWG shareholders.
EBOS is currently the majority shareholder of TWG, holding 50.000002% of the shares in TWG.
Symbion Pty Ltd, another wholly-owned subsidiary of EBOS, is also the first-line wholesale supplier to TerryWhite Chemmart pharmacies under a long-term Wholesale Agreement.
If the scheme becomes effective, TWG will become wholly owned by EBOS.
TWG shareholders, other than EBOS PH, who are on TWG’s share register at the record date, will receive a cash payment of $3.55 for each share held by those shareholders.
Following the implementation of the Scheme, TWG will operate as part of EBOS Group’s broader healthcare business and remain the core retail pharmacy franchise operation of EBOS in Australia.
EBOS says it recognises the importance of maintaining the confidence of TerryWhite Chemmart pharmacies in the leadership of TWG.
It says it does not intend to make any senior executive changes that would negatively affect the performance of TWG or the confidence of TerryWhite Chemmart pharmacies in TWG.
EBOS also says it intends to retain the recently established TerryWhite Chemmart Advisory Group and to keep the Retail Agreement and Wholesale Agreement in place.
TWG Chairman Ron Higham said EBOS had a long-standing commitment to TWG and was a supportive shareholder.
“This transaction represents a continuation of EBOS’ investment in TWG and provides a number of economic and strategic benefits to TWG, as well as to TerryWhite Chemmart pharmacies and other stakeholders,” Mr Higham said.
“EBOS is supportive of TWG’s strategies for the growth and development of the network including additional investment in marketing to increase brand awareness and reinforce the network’s differentiated customer proposition.
“EBOS’ support for the execution of TWG’s growth strategies to expand and strengthen the TerryWhite Chemmart pharmacy network is critical in a challenging and competitive retail environment where scale and capital are essential.”
EBOS Chairman Mark Waller said the EBOS Group was a major integrated healthcare organisation with the financial resources and capability to enable TerryWhite Chemmart to achieve the scale required to fulfil its potential to become Australia’s pre-eminent health-focussed retail pharmacy group.
“We believe, with EBOS’ support, TWG will have the financial strength to continue to innovate, pursue further expansion opportunities and accelerate the execution of its growth strategies.
“We are supportive of TWG management’s initiatives to improve the profitability of TerryWhite Chemmart pharmacies through supply chain efficiencies and by enhancing product ranges.
“We also support the continuation of the recently established TerryWhite Chemmart Advisory Group which operates to provide support to TWG management by providing market place input and support on its strategic vision, direction and key initiatives.”
The Independent Directors unanimously recommend that TWG shareholders vote in favour of the Scheme Resolution, and intend to vote all TWG Shares they hold or control in favour of the Scheme in the absence of a Superior Proposal and subject to the independent expert concluding that the Scheme is in the best interests of TWG shareholders.
TWG has appointed BDO Corporate Finance (QLD) Ltd as the independent expert to opine on whether the Scheme is in the best interests of shareholders and to provide the Independent Expert’s Report.
Implementation of the Scheme remains subject to conditions set out in full in the Scheme Implementation Deed, including the following procedural steps:
- The independent expert concluding that the Scheme is in the best interests of TWG shareholders;
- TWG shareholders approving the Scheme by the requisite majorities at an Extraordinary General Meeting (EGM);
- Supreme Court of Queensland approval of the Scheme; and
- No prescribed occurrence or material adverse change occurring.
The Scheme Booklet is expected to be sent to TWG shareholders in November 2018. The Scheme Booklet will contain information relating to the proposed transaction, the reasons for the TWG Independent Directors’ unanimous recommendation, details of the EGM, the Independent Expert’s Report and the other matters relevant to the TWG’s shareholders’ vote on the Scheme.
TWG shareholders will have the opportunity to vote on the proposal at an EGM which is expected to be held in December 2018.
Subject to the conditions of the Scheme being satisfied, the Scheme is expected to be implemented, with payment of the Scheme Share consideration, in late December 2018.