Engenco Shareholders Face Minority Risks as Takeover Nears Compulsory Acquisition

• Elph Investments raises offer price to 31 cents per share, final and non-negotiable
• Substantial shareholders holding over 16% have accepted the offer
• Elph Investments’ stake climbs to 88.98%, close to compulsory acquisition level
• Directors highlight premium over pre-offer share price and liquidity benefits
• Offer remains below independent expert valuation but deemed reasonable

Engenco Board Endorses Increased Takeover Offer

Engenco Limited has responded decisively to Elph Investments’ recent increase in its all-cash takeover bid, raising the offer price from 30.5 cents to a final 31 cents per share. This incremental bump, while modest, has been enough to secure the unanimous recommendation of Engenco’s board of directors, who now urge shareholders to accept the offer ahead of its closing date on 27 June 2025.

The directors’ endorsement comes amid growing momentum behind the bid, with two of Engenco’s largest shareholders; Thorney Investment Group and RAC & JD Brice Superannuation; having already accepted the offer. Their combined holdings represent over 16% of the company, pushing Elph Investments’ relevant interest to nearly 89%. This is a significant milestone, as the offer becomes conditional on reaching a 92.13% acceptance threshold that would enable Elph Investments to compulsorily acquire the remaining shares.

Premium and Liquidity, Key Selling Points

The board highlights several compelling reasons for shareholders to accept now rather than hold out. The 31 cent offer represents a 47.6% premium over Engenco’s closing price on 6 March 2025, the day before the takeover was announced. This premium is particularly attractive given the company’s shares have consistently traded below the offer price since the bid was made public.

Moreover, the offer provides a rare liquidity event for Engenco shareholders, who face a market with low trading volumes. The directors warn that liquidity is likely to diminish further if the offer closes successfully, making it harder for minority shareholders to exit their positions in the future.

Valuation and Risks of Minority Shareholding

While the offer price remains slightly below the independent expert’s valuation of 31.8 cents per share, the gap has narrowed, and the expert has concluded the offer is reasonable for shareholders not associated with Elph Investments. The board also points to the risks of remaining a minority shareholder, including limited influence and potential illiquidity, which could weigh heavily on share value going forward.

Elph Investments has declared the 31 cent offer final, signaling that no higher bids are expected. The directors consider it unlikely that a competing proposal will emerge, reinforcing their recommendation to accept promptly.

Next Steps for Shareholders

Shareholders who have already accepted the offer will automatically benefit from the increased price, while those yet to respond are encouraged to do so before the 27 June deadline. The board itself has committed to accepting the offer for all shares it controls, underscoring their confidence in the deal’s value.

As the acceptance level approaches the compulsory acquisition threshold, the final days of the offer period will be critical in determining whether Elph Investments secures full control of Engenco or if minority shareholders remain. The unfolding outcome will have important implications for the company’s future governance and shareholder returns.

Bottom Line?

With major shareholders on board and the offer nearing compulsory acquisition levels, Engenco’s takeover saga is entering its decisive phase.

Questions in the middle?

• Will Elph Investments surpass the 92.13% acceptance threshold to trigger compulsory acquisition?
• Could any rival bidders emerge despite Elph’s declaration of a final offer price?
• What are the long-term prospects for Engenco under Elph Investments’ ownership?