A takeover bid of more than $1billion for global resin maker Nuplex has been delayed as European Union regulators take longer than expected to sign off approval.
Delays could see a dividend paid to shareholders.
The Nuplex takeover has proved anything but straightforward, with Nuplex initially reluctant and rejecting the offer, which was subsequently revised three times before the Nuplex board accepted it.
Forsyth Barr broker Suzanne Kinnaird said Nuplex had advised that the EU regulatory approval process was taking longer than expected, without disclosing any reason for the delay, and does not expect clearance before the shareholders' special meeting on July7 to vote on the scheme of implementation.
"If the regulatory approval is the sole reason for the delay in the scheme implementation, NPX shareholders will be compensated by way of a 0.075c dividend for every day the scheme implementation is delayed,'' she said.
Craigs Investment Partners broker Chris Timms said while the possible compensation offer was "unique'', it was otherwise a goodwill gesture to shareholders, so as not to see them disadvantaged if the deal was dragged out.
He noted Nuplex would usually pay a dividend in September.
The compensation offer was a way of getting that process under way.
"It's not so surprising, given the number of countries approvals have to come from,'' Mr Timms said.
Mrs Kinnaird noted Allnex had made significant progress in obtaining regulatory approvals, having got clearances from Australia, China, New Zealand, Russia, and the US.
In mid February Belgian-based resin manufacturer Allnex, owned by US private equity company Advent International, offered $5.55 per share, a 41% premium, to buy Nuplex for $1.05billion,Nuplex gave Allnex six weeks of "exclusivity'' for the agreement to be pulled together, but still requires shareholder approval.
Following that six-week period, in April Nuplex entered a scheme implementation agreement with Allnex Belgium SA to accept its $1.05billion bid.
Mrs Kinnaird said the compensation payment to shareholders would be made only if the delay was solely as a result of a delay in obtaining EU regulatory approval.
If the scheme was delayed beyond August 2, shareholders would receive an additional dividend of 0.075c per share for each day the scheme implementation was delayed, which equated to a 5% per annum dividend yield, she said.
"The compensation payment will be separate from and addition to the scheme consideration of $5.43 cash per share,'' Mrs Kinnaird said.
Nuplex had initially expected all regulatory approvals would be obtained by June 29, but it now did not expect the EU anti-trust clearance to be approved before the special meeting, she said.
"The scheme will not be implemented until all relevant regulatory approvals have been received,'' she said.
While Allnex was confident EU regulatory clearance would be obtained, Mrs Kinnaird said if any issues were to arise during the regulatory process there were likely to be "opportunities and measures to remedy the situation''.
In the unlikely event the deal was unsuccessful, Allnex would have to pay Nuplex a $10.5million break fee.
The Nuplex board had initially rejected the Allnex advances, but after three offer revisions, getting to $5.55 per share, Nuplex agreed to further talks and going public on the offer.
Since 1984, Advent has raised about $US40billion in capital, completing more than 310 transactions, including more than 30 investments in chemical-related industries.
