http://finance.news.com.au/common/story_page/0,4057,10142674%255E...

http://finance.news.com.au/common/story_page/0,4057,10142674%255E462,00.html

City Pacific lines up S8
By Scott Murdoch
July 15, 2004

GOLD COAST unit manager S8 Limited looks likely to be snapped up by suitor City Pacific after a sensational backflip in which its managing director Chris Scott sold the majority of his stock.

City Pacific launched a friendly $1.40 all-scrip bid for S8 after declaring on Tuesday it was only interested in buying the company in combination with competitive rival BreakFree.

The offer values S8 at $101 million and is a 40 per cent premium on the stock's volume weighted average price for the past month of trading.

The surprise bid landed at S8 late yesterday and immediately won the support of Mr Scott, who has agreed to sell 19.9 per cent of his 37 per cent holding.

That deal is conditional on City Pacific gaining 50.1 per cent acceptance and the overall transaction is reliant on 90 per support.

S8 shareholders will receive 307 City Pacific shares for every 1000 S8 shares and 5 City Pacific shares for every 228 S8 options.

Mr Scott said last night that he was a vendor because the offer was of strong value to himself and S8 shareholders.

He was undecided about exactly what role he would maintain in the new entity but City Pacific has said the venture would continue to be operated by current S8 management.

S8 company secretary Craig Chapman is likely to take on a more influential role.

The amalgamation will give S8 direct access to top quality unit stock through City Pacific's association with Gold Coast development group Sunland.

Ironically, Sunland was initially set to join forces with BreakFree; but that deal was abandoned during S8's attempted takeover of that company last year.

"It seems like a good deal and we are always looking for shareholder value," Mr Scott said.

"I want to be involved but I don't want to be as hands-on as I have been for the past five years. We (he and Chapman) do everything ourselves – we even do the pays. I need to move on a bit from that."

City Pacific chief executive Phil Sullivan said unit management was a sensible fit to his company's current activities and would provide additional revenue and cash flow.

The offer, he said, would be well received by S8 shareholders despite the absence of a lucrative cash component.

City Pacific initially put to S8 an informal cash and scrip bid of about $1.45; but that was withdrawn when BreakFree rejected its $2.40 all-scrip offer.

Mr Sullivan said a counter-offer for BreakFree was unlikely to be made in the coming days.

"We like the (S8) business. We think the two businesses (with BreakFree) together would be a very strong business," Mr Sullivan said.

"But we have put an all-scrip offer to S8 today and it has been accepted.

"We have shown that we can grow our business, and some of the larger shareholders we have spoken to don't see any problems."

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Cheers,

Fig Jam

I don't hold SEL or CIY