Sandon Capital Investments Ltd. agreed to acquire up to 18.8% of the issued share capital of Mercantile Investment Co. Ltd. and plans to make an offer to acquire all the shares in Mercantile Investment that it does not hold.

Sandon will acquire up to 52,980,782 shares in Mercantile Investment from Siblow Pty. Ltd. Under the agreement, Sandon will issue new fully paid-up shares to Siblow in consideration for the Mercantile Investment shares. The estimated exchange ratio would be 0.21 Sandon share for each Mercantile Investment share. On that basis, Sandon would need to issue 11,274,310 shares to Siblow.

Sandon expects to complete the acquisition of Mercantile Investment shares and issue the Sandon shares on or before June 18.

Meanwhile, Sandon will make a takeover offer for all the shares it does not own in Mercantile Investment. Under the offer, if Sandon acquired all the issued shares of Mercantile Investment, it would issue up to about 59.7 million new shares and Mercantile Investment shareholders would comprise 55% of the merged entity.

Sandon believes the merger would lead to a potential increase in market liquidity of shares, greater investor interest and economies of scale.