YBR board shuns takeover bid

The board of mortgage and wealth company, Yellow Brick Road Wealth Management (YBR) appears set to recommend rejection of an unsolicited off-market takeover bid by a wholly-owned subsidiary of Sir Ron Brierley’s Mercantile Investment Company.

YBR announced to the Australian Securities Exchange (ASX) late yesterday that it had received the bidder’s statement relating to the offer to acquire all the ordinary shares in YBR at a price of $0.09 in cash.

The ASX announcement said the takeover bid was unsolicited and in the view of the Board “it materially undervalues the existing and future value of the company and is opportunistic in its nature, timing and pricing”.

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It said that a fully considered recommendation by the Board, along with the company’s target statement, would be provided to shareholders in due course.

“In the meantime, the YBR Directors advise YBR shareholders not to take any action whatsoever regarding their YBR shares in response to the takeover bid,” the ASX statement said.

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You certainly wouldn't be too happy a shareholder here with around 35% share price drop over the last 2 years. But over the same time frame you may not be too happy a franchisee here as well. The group seems to pocket around a quarter of your up fronts and trail. Add the cost for staff, rent, and office. You may also need to chip in now towards the Groups $101,477 in refunds and compensation to clients for 'Fees For No Advice' (as per ASIC site mention). One may be wrong but doesn't seem like such a great deal. Doesn't seem like such a great deal in return either from this group to their franchisees; TV and radio ads dropped, Macquarie dumping nearly all their majority slice, little product differentiation on offer, seemingly high cost of running their head office and director’s fees and what appeared to be a first profit announcement soon after an asset sale….Typical franchise story? In this climate hard to see much upside for this group and Ser Game of Thrones Ron’s Brierley’s 0.9c per ordinary share offer may not be such a bad deal after all.

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