Pepper defends its RHG bid

Pepper Australia issued a statement on Friday rebutting criticisms of its offer for RHG by its rival bidder Resimac. It argued that its offer represents better value for RHG shareholders.

Bidding syndicates led by Resimac and Pepper entered a bidding war for RHG in early July. Pepper improved its offer last week, which saw Resimac respond with a highly critical statement.

Resimac said that the Pepper bid was "highly conditional" and favoured shareholders in one of the members of the bidding syndicate, Cadence Capital.

Resimac has also suggested that the Pepper bid would be subject to regulatory intervention.

Pepper's bid is made up of a cash offer of 36 cents a share plus one fully paid ordinary share in Cadence Capital for every 10 ordinary shares in RHG. The closing price of Cadence Capital shares prior to the offer was A$1.48, and, based on this price, the offer is worth 50.8 cents a share.

Resimac said that Pepper's bid failed to deliver "certain value". It said that, based on Cadence's net tangible asset value, the bid is worth 49.88 cents a share.

The Resimac offer, which has been recommended by the RHG board, is an all-cash offer of 49.5 cents a share.

Resimac said Cadence shareholders would receive all cash under the Pepper bid, giving them preferential treatment.

Resimac also said that the Pepper bid risked regulatory intervention, "arising from the collateral benefits to Cadence and lack of clarity on aspects of the proposal (for example, the buyback that Cadence says it "may" conduct at an unspecified price only if its shares trade at a material discount to net tangible assets)."

Resimac said there was no firm commitment by Pepper to conduct a buyback of the Cadence shares that would be issued under Pepper's merger proposal.

In a statement issued on Friday, Pepper's chief executive, Patrick Tuttle, said: "Their [Resimac's] comments around the purported preferentiality, conditionality and uncertainty of our bid are entirely self-serving. Whilst we acknowledge that [there is a] clear difference between our proposal to acquire RHG and the competing all-cash offer, it is preposterous to suggest that our cash and scrip offer is simply inferior by definition, unless of course they are asserting that ASX-listed shares in the form of Cadence stock have no economic value."

Tuttle said the value of the Pepper offer had risen to 51 cents, based on Cadence Capital's Thursday closing price.