H&G High Conviction Limited has received a non-binding proposal from Hancock & Gore Limited to acquire its entire asset portfolio in exchange for H&G shares, potentially redistributing ownership stakes and altering governance dynamics.
- Non-binding proposal from Hancock & Gore to acquire HCF assets
- Exchange based on $1.00 per HCF share valuation less costs and dividends
- In-specie distribution of H&G shares to HCF shareholders excluding H&G
- Independent Board Committee formed to evaluate and negotiate proposal
- Proposal subject to shareholder approvals and definitive agreements
Proposal Overview
On 13 January 2025, H&G High Conviction Limited (ASX: HCF) announced receipt of a non-binding indicative proposal from Hancock & Gore Limited (ASX: HNG) to acquire all of HCF's assets. The offer contemplates an exchange of HCF's portfolio for shares in H&G, priced at $0.30 per share. This valuation implies a $1.00 per HCF share basis, adjusted downward by anticipated sale and transaction costs as well as any dividends declared or paid prior to completion.
Shareholder Distribution and Ownership Implications
Following completion, HCF intends to distribute the acquired H&G shares in-specie to its shareholders, excluding Hancock & Gore itself, which currently holds approximately 20.4% of HCF's shares. This exclusion means the total number of consideration shares will be adjusted to reflect H&G's non-participation in the distribution. Post-transaction, the newly issued H&G shares are expected to represent roughly 11.9% of H&G's expanded capital base, potentially diluting existing shareholders but also broadening ownership.
Governance and Oversight
To ensure impartial evaluation, HCF has established an Independent Board Committee (IBC) comprising David Groves and Dennison Hambling. Notably, Nicholas Atkinson, who holds an executive role at H&G and serves as HCF's Portfolio Manager, has been excluded from decision-making regarding the proposal to avoid conflicts of interest. The IBC is actively engaging with H&G on a non-exclusive basis, seeking to maximise shareholder value while remaining open to superior proposals.
Conditions and Next Steps
The proposal remains non-binding and incomplete, contingent on the negotiation and execution of definitive legal agreements. Additionally, shareholder approvals will be required under ASX Listing Rules 10.1 and 11.2 before any transaction can proceed. The companies have signaled that further announcements will follow should negotiations conclude successfully or if talks are discontinued.
Market and Strategic Context
This proposal could significantly reshape HCF's asset structure and shareholder composition, while also impacting H&G's capital base and governance. Investors will be watching closely to assess whether this transaction delivers enhanced value or introduces new complexities. The involvement of an independent committee and the non-binding nature of the proposal underscore the cautious approach both parties are taking amid regulatory and shareholder scrutiny.
Bottom Line?
As negotiations unfold, investors should monitor how this proposal might redefine ownership and strategic direction for both HCF and H&G.
Questions in the middle?
- Will a superior proposal emerge to challenge H&G's offer?
- How will the in-specie distribution affect liquidity and share price for both companies?
- What are the potential regulatory hurdles that could delay or derail the transaction?