Yellow Brick Road Holdings Ltd.'s directors advised its shareholders to reject Mercantile Investment Co. Ltd.'s offer to buy all of the company shares, saying the offer is "grossly inadequate."
Mercantile Investment unit Mercantile OFM Pty Ltd. had in August launched an off-market takeover bid to acquire company shares it does not own at 9 Australian cents per share, or A$20.3 million in the aggregate.
After fully considering the offer, Yellow Brick Road's board said Sept. 3 that the offer undervalues the company's shares relative to peer market valuations and does not have any control premium typically paid to shareholders in comparable takeover transactions.
Further, the company's shares have traded consistently higher than Mercantile OFM's offer price since the takeover was announced.
The board plans to reject the offer in respect of all shareholdings they own and advised shareholders to do the same.