Australian automotive retailer Automotive Holdings Group Ltd.'s board on Aug. 16 unanimously recommended that shareholders accept rival AP Eagers Ltd.'s takeover offer and decided to sell the refrigerated logistics division.
Automotive Holdings Group, or AHG, decided to sell the refrigerated logistics business after a strategic review of the division showed that it overstated 2018 revenues by A$18 million.
"The overstatement of revenues in FY2018 arose as a consequence of complexities associated with the introduction of the new computer systems for transport management," AHG said in a statement.
AHG said it will write down A$24 million in the upcoming fiscal 2019 earnings as a result of the overstatement. AHG will continue to retain UBS and Luminis Partners as joint financial advisers to carry out the sale process.
On April 5, AP Eagers offered to acquire all AHG shares that it did not already own for an undisclosed amount. At the time, the auto retailer held 28.84% of AHG. Australian competition watchdog Australian Competition and Consumer Commission on July 25 approved the merger, under the condition that AP Eagers sells Kloster Motor Group by Aug. 16.
With the Australian regulator's approval for the deal coming into force Aug. 16, AP Eagers waived all of the remaining defeating conditions to the offer, making the proposal unconditional.
As of market close Aug. 15, AP Eagers held 62.41% of AHG. AP Eagers plans to acquire all outstanding AHG shares and said those who turn in their AHG shares will receive an equivalent amount of AP Eagers shares within seven business days.
Both companies expect the transaction to close Sept. 16. Those who tender shares to AP Eagers before the closing period will be entitled to any dividend announced by the company.