SkyCity Entertainment Group rejected two takeover proposals worth up to NZ$827.3 million ($493.1 million), including a NZ$772.1 million ($460.3 million) cash approach from a special situations fund managed by Oaktree Capital Management.
The New Zealand casino operator disclosed the proposals on August 25th in response to media speculation that it was in discussions with Oaktree over a potential takeover.
SkyCity said it received the confidential, unsolicited, conditional and non-binding proposals in May.
The Oaktree-managed fund offered an indicative NZ$0.70 in cash for each SkyCity share. A second, unidentified party proposed an implied price of NZ$0.75 per share.
Based on the company’s 1.10 billion outstanding shares, the proposals valued SkyCity’s issued equity at approximately NZ$772.1 million and NZ$827.3 million, respectively.
The board unanimously rejected both approaches after determining that they did not adequately reflect the company’s underlying value and that the conditions attached to them were problematic.
SkyCity told both parties it was prepared to consider further engagement, including providing due diligence information, if they submitted improved proposals addressing the board’s concerns. Neither party returned with a revised offer.
Both proposals required at least eight weeks of due diligence and the arrangement of debt financing. They were also conditional on an agreed transaction structure, binding documentation, unanimous board support, shareholder and regulatory approvals, and the buyers’ internal approvals.
One or both bidders also requested exclusivity, retention of SkyCity’s existing debt facilities and restrictions preventing the operator from entering into binding asset acquisitions or disposals.
SkyCity said it would continue with its asset monetization program, which is expected to generate gross proceeds of NZ$275 million to NZ$300 million ($164 million to $179 million).
The program includes the NZ$74.5 million ($44.4 million) sale of two Auckland investment properties and a non-binding agreement covering the proposed sale of the Grand Hotel. The group is also conducting a strategic review of SkyCity Adelaide.
