Eumundi Board Reaffirms Support for SEQ Takeover in Second Supplementary Statement

Context of the Takeover

Eumundi Group Limited (ASX: EBG) has released its second supplementary target's statement in response to the off-market takeover bid by SEQ Hospitality Group Pty Ltd. This document updates and supplements previous disclosures, reinforcing the board’s unanimous recommendation that shareholders accept SEQ’s offer, provided no superior proposal emerges and the Independent Expert continues to affirm the offer’s fairness.

Updated Financial Illustrations and Risk Disclosures

The supplementary statement replaces several key charts in the original target’s statement to ensure consistency with the Scheme Booklet approved by the Federal Court and dispatched to shareholders in December 2024. Notably, the updated charts illustrate the offer price representing a significant premium, up to 38%, over Eumundi’s recent trading prices and a 17-21% premium to its net tangible asset backing as of June 2024.

Alongside these updates, the statement revises the risk section to better reflect potential downside scenarios. The previously stated 'Future Share Price' risk has been expanded to highlight the impact of a substantial shareholder’s increased holding, which could create a blocking stake. This raises the possibility that if the scheme fails and the takeover offer lapses, Eumundi’s share price could decline materially, compounded by reduced liquidity. A new 'Liquidity Risk' disclosure warns shareholders that selling significant volumes of shares post-transaction failure could be difficult without depressing prices.

Endorsements from the Board and Independent Expert

Despite these added cautions, the Independent Expert has reaffirmed its conclusion that SEQ’s offer remains fair and reasonable. The Eumundi board, led by Non-Executive Chair Joseph Michael Ganim, has maintained its unanimous recommendation for shareholders to accept the offer in the absence of a better proposal. The directors emphasize that shareholders can accept the takeover offer while still voting in favor of the scheme, with the transaction structure determining which process ultimately proceeds.

Implications for Shareholders and Market

This supplementary statement serves as a critical update for shareholders evaluating their options amid the ongoing takeover process. The reaffirmed recommendation and expert opinion provide some reassurance, but the highlighted risks underscore the stakes if the transaction does not complete. The presence of a potential blocking stake and the possibility of diminished liquidity could weigh on share price performance in the near term, especially if no superior offer materializes.

Investors will be watching closely for any developments, including shareholder sentiment and potential competing bids. Meanwhile, Eumundi’s management and advisers, including Taylor Collison and HopgoodGanim, continue to guide shareholders through this complex process.