China's CITIC Capital offers $211 million for Trilogy International

Friday 15th December 2017

Chinese investment manager CITIC Capital Partners, which oversees US$4.7 billion of assets, has offered $211 million to buy NZX-listed Trilogy International at a 28 percent premium.

Auckland-based Trilogy said it has entered a scheme of arrangement with CITIC Capital to sell the shares for $2.90 cash per share. The shares closed Thursday at $2.27 but peaked at $5 in August 2016. The stock was listed in 2010 under its Ecoya scented candle moniker, selling shares at $1 apiece to raise about $10 million. It jumped 21 percent to $2.75 when the NZX opened today, valuing the company at $200 million.

The offer price is a 27.8 percent premium to yesterday's closing price and a 28.1 percent premium to the volume weighted after share price over the past three months.

"The directors of TIL believe the scheme provides an opportunity for shareholders to realise value for their TIL shares a premium to market price," the skincare and home fragrance company said in a statement.

"The board remains confident that TIL is well positioned to deliver growth in earnings across each of its four businesses in the long term. Delivering this growth will take time and involves execution risks. Therefore, shareholders may find attractive the opportunity to realise the value of their TIL shares in cash now," chair Grant Baker said.

Trilogy directors have appointed Grant Samuel to prepare an independent adviser's report to help them and shareholders assets the merits of the scheme and if the $2.90 price per share is within or above the valuation range and no superior proposal arises, Trilogy's directors intend to recommend the deal and sell their shares.

The Business Bakery, which holds 31.2 percent of shares on issue, intends to sell if those terms are met. The Business Bakery underwrote the Ecoya initial public offering and ended up with 65 percent of the firm. That was diluted by the acquisition of the Trilogy skincare business and subsequent share issues.

Baker said CITIC's strong relationship in the Asia and US markets provides an opportunity to unlock the potential of its brands and achieve faster growth globally.

In a separate release, Hanxi Zhao, senior managing director of CITIC, said “we plan to accelerate TIL’s international expansion. With our unique international capability, experience and resources, we expect to be able to further strengthen the brand equity of TIL’s premium New Zealand brands, and drive growth in China, the USA and other international markets."

“It will remain largely business as usual for TIL and its team. We intend to retain TIL's Auckland head office and its current high-quality senior management team, led by CEO Angela Buglass and provide them with global support,” she added.

The scheme of arrangement follows confidential discussions between CITIC and the board and a period of due diligence, Trilogy said. The deal is conditional on the approval of Trilogy's shareholders, the High Court and the New Zealand Overseas Investment Office, among other things.

A scheme of arrangement is a court-approved process which requires Trilogy to obtain approval from shareholders at a special meeting, with 75 percent of all votes casts in favour and at least 50 percent of the total voting rights cast.

In October, CITIC boosted its stake in NZX-listed Tourism Holdings to almost 11 percent having emerged as a substantial shareholder in the motorhome operator earlier that month.

(BusinessDesk)

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