Jardine Matheson: Collapsing The Circularity

Whilst I did not believe that the Keswicks - the controlling family - had any need to immediately restructure the Jardine Matheson Holdings (JM SP) / Jardine Strategic Holdings (JS SP) organisation, the ultimate restructuring of the group was most likely to be done in a way where value for the family was maximised.

A buyout offer for Strategic would allow Matheson to capture value from minorities if the buyout offer was made below NAV. It is a cheaper alternative to a full buyout of Matheson. It maintains the group ownership levels in Strategic-held subsidiaries. And the family’s ownership in the group (which would be just Matheson and its direct subsidiaries) increases to ~43%, up from ~17.5% by my estimate currently.

And now we have a long-awaited transaction. And just like that it is also done and dusted.

Jardine Matheson Holdings Limited has today announced its plans for the simplification of the parent company structure of the Group. This will result in a single holding company with a conventional ownership structure and a further increase in the Group’s operational efficiency and financial flexibility.

Under the terms of the Acquisition, Strategic shareholders (other than Matheson) will receive US$33.00/share in cash.

The Acquisition will be implemented by way of an Amalgamation under the Bermuda Companies Act, which requires approval by a majority (the headcount test) of at least 75% of the votes cast by Strategic shareholders. Matheson, holding 940,903,135 Strategic shares - representing 84.89% of shares out - is entitled to vote on the amalgamation resolution, all but assuring Strategic shareholder approval.

Apart from playing the Strategic arb, the key questions are where Matheson should trade, and what next for key listed subsidiaries.

More below the fold.