A closer look: GWA Group’s acquisition of Methven via scheme of arrangement

NZ Lawyer examines a major mid-market cross-border deal involving top firms in Australia and New Zealand

A closer look: GWA Group’s acquisition of Methven via scheme of arrangement

In 2019, ASX-listed GWA Group Limited acquired NZX-listed Methven Limited for $118m via scheme of arrangement. The deal made a splash as a significant cross-border move, drawing involvement from major firms across Australia and New Zealand.

Bell Gully assisted GWA Group, while Simpson Grierson provided assistance to Methven on the New Zealand aspects of the transaction, while Clayton Utz advised on the Australian law aspects.

For Bell Gully, noteworthy aspects of the deal include the negotiation of a novel commitment by GWA to support Methven’s New Zealand operations after the sale was completed, the navigation of Methven’s existing employee share scheme and the consideration of Methven’s international operations.

The commitment was negotiated as part of the scheme implementation agreement to obtain the support of the party holding 20% of Methven’s shares. As per the terms of the commitment, which raised what Bell Gully said was “a number of complicated legal considerations,” GWA would support the design, innovation and manufacturing base for Methven’s tapware business in New Zealand in order to retain jobs.

Bell Gully said that Methven’s employee share scheme also generated issues related to “interest classes for scheme voting purposes” that had never been taken into account in the scheme of arrangement context in New Zealand. Addressing the issue necessitated “significant engagement” with the Takeovers Panel.

Bell Gully also had to coordinate with overseas counsel in Australia, China and the UK, where Methven had established operations, to provide “a seamless due diligence report” to its client. Nonetheless, the acquisition was successfully completed within the original time frame allotted.

On Simpson Grierson’s end, the deal was notable because according to an independent adviser, the purchase price for Methven was “at the top of the valuation range,” as well as “a material premium to the market price for Methven share” before the scheme was announced. Moreover, the scheme was able to receive the approval of nearly all of the shareholders.

The acquisition also required approval from the Overseas Investment Office. Forsyth Barr and Macquarie Group were the advisers on the transaction.

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