Court rules Wellcom’s takeover by Innocean can proceed

The Federal Court has approved that the takeover of Melbourne-based creative production agency Wellcom by South Korean marketing group Innocean can proceed.

On Friday, the court approved a meeting of Wellcom shareholders, to be held on Friday 8 November. Shareholders will receive an explanatory statement which will help in casting a vote on whether the takeover is approved, which values Wellcom at $265.8m on a fully-diluted basis.

Wellcom’s directors unanimously recommend shareholders to vote in favour of the takeover, in the absence of a better proposal, according to the notice lodged with the Australian Securities Exchange (ASX) yesterday.

Among the documents sent to shareholders is an experts report from PwC, which concludes that the takeover proposal is fair and in the best interests of shareholders.

The court’s decision follows the announcement of the planned takeover on 31 July, which would see Innocean acquire 80% of Wellcom. Under the deal, chair Wayne Sidwell, Wellcom’s largest shareholder with an interest in 12,361,887 shares, would retain his 15% of the company.

“To assist in the transition to Innocean ownership and to maintain ‘business as usual’ for current and future clients of Wellcom, I am continuing on at Wellcom under Innocean’s ownership as executive chairman and as a shareholder. I propose to enter into an employment agreement with Wellcom,” Sidwell said in the explanatory note sent to shareholders.

Should it go through, shareholders will receive cash consideration of $6.70 per share. Currently, Wellcom is trading at $6.88, extremely close to its 52-week high of $6.90.

A second court hearing will be held on 13 November to seek orders approving the takeover, following the vote.  The proposed timeline states that, should all go to plan, Wellcom will cease trading at 4pm, 14 November.

Payment under the takeover, and of dividends, is set to be paid on 27 November.

Wellcom announced a 33% lift in 2019 financial year profits three weeks after the takeover announcement. It provides advertising and marketing content production services; design, artwork and retouching; digital photography; and television production. Innocean (a fusion of the words ‘innovation’ and ‘ocean’) provides clients with above and below-the-line campaigns, digital, social, PR and media services. Its Australian office opened in 2008 with foundation clients Hyundai and Kia.


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