Milton ready to swallow fellow investment company Choiseul Teresa Ooi From: The Australian August 21, 2010 12:00AM
INVESTMENT companies Milton Corporation and Choiseul Investments are holding merger talks to create a $2 billion entity.
Milton, which has an 11.9 per cent stake in Choiseul, has been its manager since 1992. The two companies also share the same chairman, Robert Millner.
If successful, the enlarged entity would have more than $2bn in assets and more than 18,000 shareholders.
Milton has $1.6bn in assets, while the much smaller Choiseul has $500m.
Over the years, Choiseul shares have suffered from the lack of liquidity and shares have been trading at a discount to its net tangible assets, Milton managing director Frank Gooch said yesterday. The two companies have proposed a scheme of arrangement in which Choiseul's 4000 shareholders would receive Milton shares and a fully franked special dividend on completion of the deal.
The number of Milton shares to be issued would be determined by the relative net asset backing per share of each company.
"With the merger, Milton will get full control of Choiseul, which will become part of Milton. This should create better value for shareholders and more interest in the stock," Mr Gooch said.
Choiseul's independent director, Richard England, said: "The proposed merger will create a bigger asset base which, through combination, should reduce the extent to which the shares in the combined entity trade at a discount to net asset backing, especially for Choiseul shareholders.
"The proposed merger will also enable Choiseul shareholders to continue to benefit from the management of their investment by Milton."
Choiseul will appoint an independent expert to assess Milton's proposal and whether it is in the best interests of shareholders.
Choiseul will also appoint KPMG as corporate and financial advisor.
Milton shares fell 12c to $15.58. Choiseul shares rose 17c to $4.75.
