- An unsolicited off-market takeover offer by education business UCW (UCW) for control of Redhill Education (RDH) has opened up a nasty back-and-forth between the two companies
- UCW launched the bid in December, offering RedHill shareholders 4.5 shares in UCW for every one RDH share held
- However, RedHill released a target's statement yesterday, slamming the UCW offer and urging shareholders to reject the deal
- RedHill said UCW is after RedHill's cash balance to remedy its own weak cash position
- UCW hit back today, however, accusing RedHill's statement of containing several inaccurate suppositions and disparaging statements
- The company maintained that its bid has strong strategic rational with significant benefits for both UCW and RDH shareholders
- Shares in UCW tacked on just over 2 per cent to close at 22 cents each today, while RedHill shares fell almost 10 per cent to 89 cents each
An unsolicited off-market takeover offer by education business UCW (UCW) for control of Redhill Education (RDH) has opened up a nasty back-and-forth between the two companies.
UCW initially launched its bid in December, offering RedHill shareholders 4.5 shares in UCW for every one RDH share held, implying a share price of 79 cents per share for RedHill.
At the time, UCW Chairman Gary Burg said the takeover would allow both companies to take advantage of the tailwinds in the domestic student market. Nevertheless, RedHill management told shareholders to take no action while it put together a target's statement in response to the offer.
The target's statement dropped yesterday, wherein RedHill told shareholders to reject the deal.
No deal, says RedHill
In the scathing statement, RedHill accused UCW of "opportunistically seeking to gain control over RedHill's significant cash balance to remedy its own relatively weak cash position".
RedHill management added that UCW was trying to take advantage of the relative weakness in the RDH share price and earnings because of COVID-19.
In fact, RedHill went as far as to say the synergies between the companies put forward by UCW in its bidder's statement are "not appropriately disclosed and potentially overstated".
"UCW has a poor track record, poor governance record and higher risk profile relative to RedHill," RedHill said.
"If you accept the offer, you risk missing out on a superior offer from another party if one emerges," the company warned shareholders.
In any case, RedHill said shareholders holding around 11.2 per cent of RedHill shares — including directors and management — have already decided to reject the offer, meaning the deal is already shot down.
UCW hits back
Today, UCW hit back at RedHill's target's statement with accusations of its own.
UCW management said RedHill's statement contains a "significant number of inaccurate suppositions and disparaging statements", to which UCW will respond in time.
The company maintained that its bid has strong strategic rational with significant benefits for both UCW and RDH shareholders.
"Based on RedHill's response and approach to the offer to date, UCW does not believe that the RedHill Board, led by Interim Chairman Stephen Heath, who together own less than one per cent of the ordinary shares in RedHill, are acting in the best interests of RedHill shareholders," UCW said.
Moreover, UCW claims 26.8 per cent of RedHill shareholders have already accepted the offer as of January 12.
RedHill shareholders have until January 29 to accept the offer unless UCW extends or withdraws the offer before then.
Shares in UCW closed 2.38 per cent higher at 22 cents each today, while RedHill shares lost 9.64 per cent to close at 89 cents per share.