Good morning,

Turn your sets to the Pacific Current Group annual meeting on Thursday, where one of the year’s most bizarre takeover battles is going down.

On Monday, PAC’s independent board committee released an ASX statement that we’re still struggling to get our heads around.

It appears its largest shareholder, River Capital, put up an offer at $10.50 per share, funded via a complex sale of most of PAC’s interests in its affiliate fund managers to GQG (at a premium). River would then acquire PAC’s interests in the remaining affiliates (those not sold to QGQ) at a discount.

PAC also claimed GQG was not aware the proposal had been submitted, which we find difficult to believe.

It’s unclear which affiliates PAC would hold vs GQG but really, it doesn’t matter. Discussions broke down – we understand over the price – which raises the question of why PAC disclosed it at all. We’re sure they’d say they were just providing an update on the transaction, though they didn’t exactly encourage GQG to be clear about its terms.

Don’t forget, this is the same takeover process which Regal was up in arms about, saying they had no confidence in how it was being run when withdrawing their own bid.

River Capital was so aggrieved by PAC’s account of the events that it put out its own ASX-style release on Monday night to “clarify several misconceptions”. River didn’t acknowledge the $10.50 bid at all, but went to great lengths to say that they had sought to be a constructive shareholder throughout the process and conducted discussions in good faith.

Frankly, it’s difficult to know what’s really going on here, but it’s clear everyone is annoyed.

The question we’re left with is, what are PAC’s true intentions here? Are they really trying to get a higher price for shareholders? If so, their version of 3D chess involves irritating their largest shareholder.

What happens from here is unclear, but it doesn’t seem like there’s much competitive tension in this process.

River has called for PAC to get an offer above the NAV or move on and focus on delivering value from its existing assets. That sounds fair to us. Hopefully, some of its next steps will be outlined at the AGM and some tough questions asked.

Happy reading,

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