Cashed-up predator G8 Education (ASX:GEM) has acted quickly to the latest pressure tactic by agreeing to freeze acceptances from three Affinity shareholders who are said to have links with G8.
Affinity this week approached the Takeovers Panel questioning the relationship between G8 and the shareholders, Taxonomy Pty Ltd, JB Super Fund and West Bridge Holdings.
The Takeovers Panel has not commented on the merit of Affinity's claims and has made no commitment to investigate allegations, but G8 says it says it intends to adhere to interim orders detailed in Affinity's application.
The move means that G8, which has a 19.89 per cent stake in Affinity, can't yet count on acceptances from the three shareholders in question, a stake that amounts to 9.46 per cent of Affinity's issued capital.
The freeze is in place until September 21, the deadline for a rival bid from private equity group Anchorage Capital Partners to emerge, or until the Takeovers Panel makes a decision on the concerns raised by Affinity.
Affinity highlights the timeline of the share acquisition as a key reason for its call to the Takeovers Panel to investigate.
Both JB Super Fund and Taxonomy acquired 10.6 million shares in Affinity between them on July 9, in the wake of a takeover offer proposed by G8 on July 3. A little over a week later, West Bridge Holdings acquired 11.3 million shares in Affinity, ahead of the August 21 opening of G8's scrip bid.
G8 has valued Affinity in separate scrip and cash offers at 80c a share. However, the Anchorage offer is mooted to be pitched at 90c a share cash, an offer that Affinity's board has backed.
G8 notified the market that it had secured acceptances for 4.58 per cent of Affinity shares on August 21, which was the exact combined holding of JB Super and Taxonomy. This took G8's interest in Affinity to 24.5 per cent.
Affinity has submitted that it was "economically and commercially irrational to (accept the offer at that time) and Taxonomy and JB Super must have an understanding and association with G8".
It also suggests there are structural links between the three shareholders and that G8 has now tied up 20 per cent of the company's capital which would stymie any superior bid that may be on the table.
Affinity has sought full disclosure of any relationship between the companies and has called for the shares held by Taxonomy and JB Super to be vested in ASIC for sale.
Affinity says an independent expert has labelled the G8 offer as neither fair nor reasonable and the board has rejected the bid.
The bad blood between predator and prey emerged after preliminary discussions for a buyout were initiated by G8 with the Affinity board in April.
After initially proposed a nil-premium merger at $1.10 a share, G8 approached Affinity in June with a second offer at 82.5c a share.
Affinity has yet to post a maiden profit after delivering a $2.1 million loss in the June half-year. G8, which is Australia's largest listed childcare operator and adopts a different business model to Affinity, posted a June-half profit of $28.2 million.
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