Breville says GUD needs to add cash to takeover offer

Electrical appliance maker Breville has advised investors to take no action on a takeover offer from GUD Holdings and has pushed GUD to add a cash component to its all-scrip deal.

GUD lobbed a 1-for-4 share swap takeover deal last week, valuing Breville at $300 million.

GUD already owned 19.4% of the company and secured support for its bid from a number of key institutional investors, giving it control of around 47.4% of the company, providing no higher bid emerges.

But Breville chairman John Schmoll has advised shareholders to sit tight, saying GUD’s bid it not final and there is some chance it may increase its offer.

He has also signalled the board wants to see a cash component added to the bid before it could be endorsed.

“There is no cash component to GUD’s offer and there is a risk that CGT rollover relief will not be available. Breville shareholders who accept GUD’s offer could have a tax liability but have no cash from GUD to pay that tax.”

Schmoll also says that unless GUD becomes the owner of at least 80% of Breville’s shares, Breville shareholders will not be entitled to ‘scrip for scrip’ capital against tax relief.

There is no word yet from billionaire Solomon Lew, who controls around 30% of Breville in conjunction with his listed investment vehicle, Premier Investments.

If Lew decides to accept GUD’s deal, then it looks almost certain to succeed. But there has been speculation that the cashed-up Premier may launch a rival bid for Breville.

This morning, GUD shares were trading at $8.68, valuing its bid at $2.17. Breville shares jumped 4.2% to $2.23.