John McGrath has struck a deal to sell McGrath Limited to Knight Frank and Bayleys, in a move that would also see the company delisted from the ASX.
McGrath announced today that the board had unanimously approved the proposal for the company to enter a Scheme Implementation Deed with a consortium of Knight Frank and Bayleys.
The consortium has agreed to acquire 100 per cent of the share capital of McGrath by way of a scheme of arrangement
Mr McGrath said he intended to receive the unlisted scrip alternative for all of his McGrath shares, which is a 23.2 per cent stake, and he will continue as chief executive officer and managing director when the scheme starts.
It is expected to start before June 30 and it would also see McGrath delisted from the ASX.
“We are delighted to have received this offer from a consortium comprising a leading global property firm in Knight Frank, which has a strong residential real estate offering throughout the world, and leading New Zealand full-service real estate agency in Bayleys,” Mr McGrath said.
“Together we share common values and cultures and see the potential partnership with McGrath as a positive development for our industry, and for McGrath agents, team members, franchise partners and customers, who will benefit from the consortium’s global networks, access to high net worth clients and real estate expertise in support of our vision and growth plans.
“My role as CEO will continue and, if the scheme is approved, I look forward to continuing to work with the great team at McGrath but also in taking advantage of the opportunities afforded by international partners Knight Frank and Bayleys.”
Under the scheme, McGrath shareholders would have the option to receive $0.60 cash per share or an unlisted scrip alternative, or a combination of both.
McGrath shareholders would also be entitled to a permitted dividend prior to the start of the scheme, which would not reduce the price.
The McGrath board, which holds about 48.1 per cent of the company’s shares, unanimously recommends shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to an independent expert report.
McGrath Chair Peter Lewis said in considering the merits of the scheme, the directors had been committed to acting in the best interest of shareholders.
“Our view is that the scheme represents an excellent outcome for McGrath shareholders, customers, our agents and staff,” he said.
“The scheme consideration is at a significant premium to historical trading prices, offering McGrath shareholders with certainty of value and the opportunity to realise their investment in full for cash.
“It is pleasing to see that Knight Frank and Bayleys share a similar business ethos and approach to McGrath and I see this as a positive development for the McGrath senior management and team members who will continue to be led by its Founder and CEO John McGrath.”
Knight Frank Chief Executive Officer of Australia, James Patterson, said he was excited at the prospect of the consortium.
“We are excited at the prospect of Knight Frank and Bayleys potentially partnering with McGrath, which is a well-established residential property business with a wide reach within Australia,” he said.
“Knight Frank has a world class global network with more than 125 years of experience.
“The acquisition would allow Knight Frank to have a leading position in residential and commercial real estate in Australia, creating a full service real estate capability to support and advise clients and customers.”
Mr Patterson said the partnership would see all brands operating “business as usual”.
“Working together, these teams will create a powerful combination of local expertise with global reach, which will generate enormous opportunity for McGrath and its customers,” he said.
Bayleys Managing Director, Mike Bayley, said the partnership would be a collaboration that could provide “unprecedented global reach”.
“The ability to share ideas and innovations as well as systems and information will add considerable value to our clients across Australasia,” he said.
“Bayleys is the largest full service real estate organisation in New Zealand and has considerable expertise across the residential, commercial, and rural market sectors as well as in franchising.
“We believe that, as a consortium, Knight Frank and Bayleys are the best partners to ensure McGrath is well positioned to realise its long-term strategic objectives and capitalise on its next phase of growth.”
A scheme booklet containing information relating to the proposed acquisition under the scheme, reasons for the McGrath directors’ recommendation, an independent expert report, and details of the scheme meeting will be prepared and provided to the Australian Securities and Investments Commission for review, and subsequently sent to McGrath shareholders.
