California-based investment manager KKR will pay a significant premium to acquire non-bank lender Pepper after the group today announced that it has entered into a scheme implementation deed.
The board of the ASX-listed non-bank lender announced on 10 August that it has entered into a scheme implementation deed with an entity owned by California-based KKR Credit Advisors.
The KKR entity, known as Red Hot Australia Bidco, has proposed to acquire all of Pepper’s shares. If granted, Pepper shareholders will receive a cash payment of $3.60 per Pepper share plus a 3 cent dividend.
With more than 181 million shares on issue, KKR will acquire Pepper for close to $675.9 million, $37 million more than the current market cap of $638 million. Pepper shares were valued at $3.43 before the market opened this morning.
“After careful consideration, we believe this offer is consistent with the board’s efforts to deliver maximum value for shareholders,” Pepper group chairman Seumas Dawes said.
“We believe it represents a compelling opportunity for shareholders, allowing them to choose to either obtain liquidity for their shares at an attractive valuation or remain invested in the Pepper business.”
Mr Dawes controls 29.7 per cent of total shares.
Shareholders may also choose a scrip option, enabling them to retain an interest in the Pepper business.
Pepper’s board has recommended shareholders vote in favour of the scheme, which — in addition to shareholder approval — is subject to a number of conditions, such as Foreign Investment Review Board (FIRB) approval and the approval of other local and foreign regulatory bodies, given Pepper’s business interests in Ireland, Korea and the UK.