ARC’s Withdrawal of TTDS Scrip Offer Leaves Minority Shareholders in Limbo
ARC Funds Limited has withdrawn its scrip offer for the remaining shares in The Term Deposit Shop Pty Ltd after securing acceptances for just over 10% of the target shares, raising its ownership to nearly three-quarters of the company.
- ARC offered to acquire remaining 36.51% shares in The Term Deposit Shop
- Received acceptances for 10.99% of target shares via share swap
- Ownership in The Term Deposit Shop rises to 74.48%
- Offer withdrawn for remaining minority shareholders
- Share issuance to accepting shareholders pending shareholder approval
Background to the Offer
ARC Funds Limited (ASX – ARC) initially proposed a scrip offer to acquire the remaining 36.51% stake in The Term Deposit Shop Pty Ltd (TTDS) that it did not already own. This move was part of ARC’s strategy to consolidate its position in TTDS, a company operating in the financial services sector. The offer, announced in June 2025, aimed to exchange shares in ARC for the outstanding shares in TTDS held by minority shareholders.
Partial Acceptance and Withdrawal
Despite the initial ambition to acquire the full remaining stake, ARC has received applications for only 165,000 shares, representing 10.99% of TTDS’s issued capital. Following the completion of these share swaps, ARC’s ownership in TTDS will increase to 74.48%. However, the company has decided to withdraw the offer for the remaining shares, effectively ending the opportunity for other minority shareholders to participate.
Next Steps and Shareholder Approval
The shares accepted in the swap will be exchanged for 3,584,262 fully paid ordinary shares in ARC, subject to approval at an upcoming Extraordinary General Meeting (EGM). This step is crucial as it formalises the increase in ARC’s stake and integrates the new shareholders into ARC’s capital structure. The board’s decision to withdraw the offer suggests a strategic recalibration, possibly reflecting the limited uptake from minority shareholders or a reassessment of the acquisition’s value proposition.
Strategic Implications
By increasing its stake to nearly three-quarters, ARC solidifies its control over TTDS, potentially streamlining decision-making and operational integration. However, the withdrawal of the offer leaves a significant minority stake outside ARC’s direct control, which could influence future governance dynamics. Investors will be watching closely how ARC leverages this enhanced position and whether further consolidation efforts will follow.
Market and Investor Considerations
The market reaction to this development may hinge on the perceived strategic benefits of the increased ownership and the terms of the share swap. The pending shareholder approval at the EGM will be a key event, as it will confirm the capital structure changes and signal shareholder confidence in ARC’s approach. Meanwhile, the minority shareholders who did not participate remain an open question for ARC’s future engagement strategy.
Bottom Line?
ARC’s partial consolidation of TTDS sets the stage for a pivotal shareholder meeting and potential strategic shifts ahead.
Questions in the middle?
- Will ARC pursue further acquisitions to capture the remaining minority shares in TTDS?
- How will the increased ownership stake influence ARC’s operational control and strategy for TTDS?
- What are the implications for minority shareholders who did not accept the offer?