360 Capital makes Evans Dixon takeover play as ASIC action looms

The takeover pits a Sydney-based corporate raider against a Melbourne’s elite stockbroking fraternity.

360 Capital’s Tony Pitt. Picture: John Feder.

Acquisitive funds manager 360 Capital is looking to bring the tumultuous life of financial services firm Evans Dixon as a listed company to an end and lobbed a surprise takeover proposal on Tuesday.

The move by the cashed up Sydney-based company could cap off the disastrous listing of Evans Dixon which was brought undone by Dixon Advisory directing investors into its controversial US property fund, which has drawn civil penalty charges by the corporate regulator.

360 Capital managing director Tony Pitt capitalised on disarray at the company by building up a 19.55 per cent interest, mainly bought as founder Alan Dixon exited the company in August.

His company’s cash and scrip offer would bring home the consequences of the action launched by the Australian Securities and Investments Commission against Evans Dixon, which prompted weakness in the already laggard share price.

The target firm has been organising its defences since Mr Pitt emerged as an investor and he took a board seat this month with the aim of speeding its turnaround.

Mr Pitt, who has a name for taking states in fallen companies and turning them around before selling out, has remained one of the most active players in finance during the crisis, floating credit and asset funds despite market turmoil.

He is likely to present himself as an agent of change for the company that has fallen well short of initial hopes of becoming a major finance house despite advising on about $20bn worth of funds and offering corporate services to mid-size companies.

The incumbent management, led by executive chairman David Evans, who has about 10 per cent of the stock, counts some of Australia’s wealthiest families as supporters, setting up likely setting up a battle for control of the struggling firm.

However, Mr Pitt is an experienced corporate pugilist and the laggard performance of Evans Dixon’s shares since listing could lead some investors to back his proposal.

The register is also heavy with Evans Dixon employees and Mr Pitt is likely to seek to ensure their futures, piling pressure on the incumbent management to present a viable path for the company.

360 Capital’s off market takeover would offer 40c per share plus one of its shares for every four Evans Dixon shares. 360 Capital said its offer price is valued at 61c per share, arguing this is “compelling value”.

Evans Dixon shares jumped 4.5c, or 7.8 per cent on Tuesday to 62c, and observers suggested that the offer was a first salvo in what could be a drawn out battle by the Sydney corporate raider on the register of the firm that has attracted many of Melbourne’s elite.

The offer price is a 35 per cent premium to the average price at which 360 Capital built up its 19.55 per cent stake and is also a 54 per cent premium to the share price shortly after the company disclosed ASIC was taking corporate action against the Dixon Advisory and Superannuation Services Limited unit.

360 Capital also lashed the performance of Evans Dixon saying its trading price had decreased 79 per cent since the company’s IPO in May 2018.

360 Capital believes that the offer represents a compelling opportunity for the Evans Dixon shareholders to exit their investment before any further value destruction, “including arising as a result of the ongoing ASIC proceedings against Dixon Advisory”.

Mr Pitt is also pressing the target company to drop a resolution at its upcoming annual meeting on November 11 that would see its options and rights plan amended.

His company warned that the resolution would enable Evans Dixon to“materially increase” the control that management personnel have over the company.

“360 Capital is concerned that concentrating ownership in the hands of management personnel will be adverse to shareholders and, among other things, will reduce liquidity and the attractiveness of the company as an investment,” it said.

360 Capital is being advised by Clayton Utz as legal advisers and Aitken Murray Capital Partners and Cambridge Investment Partners as financial advisers.