LIC makes acquisition bid for PSI
By Craig Phillips
Brickworks Investment Company (BKI) is aiming to boost its underlying investment portfolio through the acquisition of Pacific Strategic Investments (PSI) following the pair reaching an agreement in principle to merge.
The proposal will see recently launched listed investment company BKI offer two of its shares for every seven PSI shares, and is based on the financial position of both groups as of June 30.
PSI, which is a listed corporate investment vehicle, has been reviewing its business options for some time with the board considering a number of alternatives ahead of last week’s announcement.
“It has been apparent that the relatively small size of the company and its relatively high management-expense ratio has affected both the discount asset backing and shareholder liquidity. Merging the group’s portfolio and expanding the relative size of the company appeared to be the most logical option to pursue,” PSI says in a statement.
BKI’s listing on December 12, 2003 was a busy time for LIC launches. However, the market’s appetite for LICs fell away somewhat in the first half of 2004 with some scheduled vehicles postponing their launch while others fell across the line after just meeting their set minimum target levels.
W H Soul Pattinson Company, which is PSI’s largest shareholder (24 per cent), has indicated its intention to accept the bid.
Two BKI directors — Hall and Millner — are also directors of PSI and it is understood PSI chairman, Geoff Hill, will be invited to join the board if the transaction is completed.
The independent directors of PSI have appointed Grant Thornton to prepare a report into the offer.
Meanwhile, in other LIC news, two vehicles — Aberdeen Leaders and Argo Investments — announced their annual results today.
Aberdeen experienced a 26 per cent rise in its revenue on net tangible assets and resulted in a 28.4 per cent rise in its share price for the year ending June. And Argo, which is almost 60 years old and one of the oldest LICs, announced an after tax profit for the 12 months ending June 30 of $78.6 million.
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