I have been looking at the Corporations Act in particular S.606 thereof and a number of related commentaries and if I have understood correctly Merk could be acquiring shares on market but is prohibited from acquiring more than 20%. The penalty for acquiring more than 20% would be that it would then be required to make an on market takeover bid. If it is Merk acquiring shares even if it keeps to 20% or less it will still need to lodge a substantial holder notice when it passes 5% or having passed 5% whenever its holding changes by 1 % or more either way. This prohibition applies to related parties to Merk and the definition of what or who can be a related party is very wide under the Act.
In relation to Lepu my research appears to support the view that having advised that it will vote in favour as part of the off market proposal it would appear to have lost its entitlement to vote against the proposal by Merk. I am not 100% sure of this however it of course would not be so bound if a higher bid was received. The further issue which I am unclear on is whether having advised its support for the bid whether it now would fit under the definition covering related parties where Merk is concerned so that if it is the purchaser of the large volume of shares referred to it could technically cause Merk to be in breach of S.606 at some point if they or Merk in a combined sense create a holding greater than 20%. The answer to this is not easily found in the material available to me.
Don't know if this helps anyone but was interesting looking at the provisions covering off market takeovers.
VLA Price at posting:
$1.66 Sentiment: Hold Disclosure: Held
