Melstacorp ups mandatory offer price on Spence

Melstacorp Limited, a 100% owned subsidiary of Distilleries Company of Sri Lanka (DIST), yesterday announced an adjusted price of Rs. 112.83 (subject to regulatory approval) for the Mandatory Offer to purchase all the remaining ordinary shares of Aitken Spence (SPEN), amounting to 284.2 m shares (70%).

This move follows one of the Non-Executive Directors purchasing shares at prices higher than the offer price (Rs. 110 per share) during the twelve months immediately preceding the date on which the obligation arose for the Mandatory Offer.

These shares had been acquired by the Broker of the said Director with whom he maintains a discretionary account, and were made without any instructions given by the Director. The company consequent met with officials of the Securities and Exchange Commission (SEC) on 18 January 2012, and made an application on the 20 January 2012 to the SEC to determine an adjusted price if it is the opinion of the SEC that the Director who made the purchases is a party “Acting in Concert”. The company had arrived at the “Adjusted Price” based on the “Volume Weighted Average Price” pricing formula. Melstacorp further stated that in the event that the SEC determines that the “Adjusted Price” should be higher than Rs. 112.83, it has further sought the concurrence of the SEC to divest such number of shares to avoid liability, since paying a price higher than Rs. 112.83 will not be financially viable for Melstacorp Limited.