As expected, Jardine Matheson Holdings’ proposal to acquire the 15% stake in Jardine Strategic it does not already own, has been approved by shareholders of the latter at a Special General Meeting.
Under applicable rules, the deal requires 75% of the Jardine Strategic shareholders to say yes. Jardine Matheson’s 85% stake in Jardine Strategic practically guarantees that this will be a done deal.
The acquisition, at US$33 per Jardine Strategic share, will become effective on April 14. The deal is meant for the Jardine companies to remove the existing cross-holding structure designed such that the controlling Keswick family can exert the most influence over the various separately-listed entities.
However, some investors are unhappy that the offer is a deep 43% discount off Jardine Strategic’s book value of US$58.22 per share and therefore can be improved. Besides the Jardine group of companies, business conglomerates usually trade at a discount.
Citing the 21% gain in its share price following the announcement of the acquisition, Jardine Matheson claims it has “received widespread support” from shareholders for this deal. Jardine Strategic, meanwhile, was up 29% “providing evidence that a similar value uplift has accrued to all shareholders of the group as a result of the parent company restructuring.”
Jardine Matheson notes that “a number” of Jardine Strategic shareholders voted against the acquisition during the Special General Meeting. However, it also points out that a large number of shares voted against the resolution were held by investors who were not shareholders at the time of the announcement of the acquisition on March 8.
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Jardine Matheson also notes that some investors have indicated an intention to apply to the Court in Bermuda to appraise the fair value of their shares, in accordance with the process described in the shareholder circular issued by Jardine Strategic.
Jardine Matheson believes that US$33 represents fair value for the Jardine Strategic shares and that the process undertaken was fair, transparent and robust.
“Jardine Matheson’s strong conviction is that Jardine Strategic shareholders have been offered fair value for their shares and is confident that any appraisal process by the Court of Bermuda will confirm this position,” the company adds.
Following the completion of the acquisition, Jardine Matheson will table a resolution to implement the cancellation of the cross-shareholding in Jardine Matheson through a reduction of capital at the annual general meeting in 2022, and for this to become effective shortly following that meeting.
“The simplification will result in a single holding company with a conventional ownership structure. This will provide an increase in the group’s operational efficiency and financial flexibility, while delivering a material enhancement in Jardine Matheson’s earnings per share,” the company says.
On April 12, Jardine Matheson shares closed the day at US$64.37, up 0.2%; Jardine Strategic shares closed at US$32.90, down 0.39%.
