Allied Leisure has increased its offer for European Leisure in what it describes as its final offer. It is recommended by both boards. The offer is 424 new Allied shares for every 100 European shares. It represents a 17.5 per cent increase on the first recommended offer. Under the deal, European shareholders would end up with 56 per cent of the enlarged group compared with 52 per cent previously.
Under the first offer, European shareholders representing 21.55 per cent of the equity had accepted that offer. They will now automatically be entitled to the revised offer.
If the merger between Allied and European goes ahead, the enlarged group will not go ahead with its planned takeover of Waterfall in which European has a 23.8 per cent stake. That plan triggered a counter-takeover bid by Waterfall for European. Earlier this week Waterfall announced it had received acceptances from shareholders representing 5.99 per cent of European at the end of the first closing date and the offer has been extended to June 7th.
In a further twist in the three-way battle between the leisure groups, the resolution by European calling for the removal of Ernst & Young, as auditor of Waterfall, has been defeated. "A massive majority of the independent shareholders who voted have rejected European's ill-founded resolutions", Waterfall's chairman, Mr John Garrett, said yesterday. "I am delighted at this public statement of support for the board and vindication of Waterfall's management record".
On the first resolution, calling for an independent firm of chartered accountants to be appointed, a total of 29.2 million shares were voted of which 19.2 shares were voted against. Excluding European's holding, 98.8 per cent of the votes cast were voted against. On the second resolution calling for the removal of the auditor, there was a similar result with 98.8 per cent (excluding European) of the votes against.
Waterfall said it is to press ahead with its offer for European, saying it is "committed to building on the compelling commercial fit between Waterfall and European to produce real benefit for both sets of shareholders".
Allied and European said they will sell the stake in Waterfall because they "have serious concerns regarding the real level of Waterfall's maintainable profits". The stake, they said, will either be sold as a single block, or over a phased period "at an appropriate time after the merger is completed".
Allied and European have again reiterated the industrial logic of a merger between the two firms.
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