Full takeover of Promentum:

Client – Promentum Ltd
Sector – Printing
Transaction – Full takeover of Promentum by GEON Group via Scheme of Arranagement

Scope of Advisory Services

Promentum Ltd (“the Company”) engaged Pitt Capital Partners (“PCP) as its financial advisor following the receipt of an unsolicited takeover offer by GEON Group (formerly Pacific Print Group) for all the shares in Promentum via scheme of arrangement.

Issues Encountered

Shortly following receipt of the takeover offer, the Company provided a trading update, downgrading profits for the financial year ending June 2006. As a result, Promentum saw its share price drop considerably, from $1.51 to $0.99. As a consequence, PPG withdrew its original offer stating that the profit assumptions used in their valuation of Promentum had materially changed and, whilst still interested in a potential transaction, would submit a revised proposal based on new assumptions.

On PCP’s advice, PPR undertook a strategic review of its operations with the Company implementing numerous cost-cutting initiatives in an attempt to improve profitability. PPG’s revised offer was then rejected on the basis that it substantially undervalued the Company with the decision also supported by an independent expert’s valuation which stated the revised price was below PPR’s fair valuation range.

Solutions Provided by PCP

PCP’s advice to Promentum to undertake a strategic review to restore profitability and profit margins prior to engaging interested parties on potential takeover offers enabled the Company to benefit from a stronger bargaining position. The initiatives enabled Promentum to commence a competitive bid process as the Company’s valuation was supported by stronger fundamentals.

How did we provide a tailored solution to meet the clients need?

PCP was able to tailor a solution to Promentum’s needs by evaluating the Company’s various strategic options which would deliver maximum value to shareholders. Not only did PCP approach various parties for expressions of interest for a full takeover, PCP also evaluated opportunities for long-term value adding acquisitions. The result was a competitive bid process for Promentum, which was viewed as the prize asset in the Australian sheet-fed print sector for private equity players.

Result provided to client – Why was this a good result for the client.

By introducing multiple parties to the bidding process, PCP was able to achieve a price for Promentum which exceeded the top end of the independent expert’s valuation range of $2.13. The shareholder vote on the Scheme of Arrangement was 99% in favour of the takeover. The final takeover price of $2.25 was a premium of approximately: