2CC - 2 Cheap Cars Group

[Basil]

While Basil is supremely confident (if not supremely modest) and with 2CC payout expectations recently rising from anywhere between $1.00 to $1.60 it is fascinating to see some respected doubters emerge in the form of Snoopy (aka Red Baron) and Value NZ.

Value and Percy are quite correct that there are a range of potential outcomes here.
The only thing I would say I am supremely confident of is that the offer will not be a success at 80 cents and that confidence is based on some very solid intel.
The other Beagle needs to spend more time actually reading the takeover documents.
Yes...to ordering in more popcorn.  This could get even more interesting.

[LoungeLizard]

The problem with being confident that the offer won't be successful, is that, even if true, then what? Back to business as normal? With a majority shareholder who happens to be the CEO and is probably frustrated that he wasn't able to buy the company at what he probably feels was fair value. Not a good outcome for anyone I would have thought and not a good sign going forward. Having trust in Management is crucial if you are going to hand them your money. Who now, amongst the smaller shareholders, trusts Senna to act in their interests?

[Basil]

I'm cautiously optimistic that a higher price can be negotiated.

[lorraina]

The problem with being confident that the offer won't be successful, is that, even if true, then what? Back to business as normal? With a majority shareholder who happens to be the CEO and is probably frustrated that he wasn't able to buy the company at what he probably feels was fair value. Not a good outcome for anyone I would have thought and not a good sign going forward. Having trust in Management is crucial if you are going to hand them your money. Who now, amongst the smaller shareholders, trusts Senna to act in their interests?

There is a lot going on with competent people pointing out the flaws in the very poor independent report.
David Sena has extended his offer until the 23rd September.
I expect his low acceptance level will make him willing to speak and discuss this with the competent people.
Perhaps the other 2CC directors will realise shareholders best interests are being undermined by the independent report,,and may have second thoughts. 
I see a lot of water going under the bridge before the 23rd September.
We must consider who will gain the most by this take over. Only one person whose name is David Sena.
It would be helpful to shareholders and the market for ACC to declare their position,ie whether they intend to accept the offer or not.

[LoungeLizard]

ALl true and there's a number of ways this would go, but I was just addressing the scenario where the offer lapses and Senna admits defeat and goes back to running the business (and perhaps trying to increase his holding to the 90% mark over time). There's a lot of bad blood being created here and he is the majority shareholder and CEO so he has a lot of influence either way. I'm just saying I wouldn't want him in charge of looking after my money going forward. Who would?

[Basil]

Fortune favours the brave.  I'm okay with staying on the bus if a deal can't be reached.  CDL did not get to 90% with MCK and they've acted with integrity since then.  Oliver Mander thinks David Sena is a pretty good CEO.  I don't see him burring the house down out of spite if he fails to get to 90%.

[lorraina]

Good points.
It's the flawed independent report that is the  current issue.
It backs up Sena's and the directors' actions.
But shareholders should not be made to make a financial decision on a flawed report. 

[Basil]

it is fascinating to see some respected doubters emerge in the form of Snoopy (aka Red Baron) and Value NZ.

Count Snoopy out, he just posted this on ST.

Up until now I have just relied on the views quoted by the unofficial 'Union of dissenters' on Shartrader. And I must say none of you have let me down. Everything you have quoted seems accurate.

As for value N.Z. he broadly concurred with my probability analysis posted earlier today that I have subsequently deleted for several reasons.

Order some more popcorn in....the dog is far from finished with this.  Give a Beagle a bone to gnaw away on and guess what he does lol

[Left Field]

Count Snoopy out, he just posted this on ST.

I don't think we can count Snoopy out as he goes on to say....

"Despite that extra information, my feeling is that it changes nothing. I think all up , David Sena could rustle up an extra $2.6m, on top of the ANZ loan facility already negotiated. Although the offer document doesn't say so, I think he could access that money if it is required to pay shareholders more than the original 80cps offer price.

If the 90% threshold is not reached, then $2.6m at 80c per share could buy out $2,600,000/$0.8 = 3.25m shares

3.25m is still well short pf the 6.412123m shares required to get to 90%. But if more than 3.25m shares were offered to David Sena, I think that would encourage him to 'up his offer' to get the deal over the line. If less than 3.25m shares were offered, then David Sena could take those after declaring the offer unconditional, then let the offer expire for the non-acceptors. It would mean David Sena would have to come back another day, if he wanted to take the company fully private."

Thus there is still considerable risk that dissenting shareholders will become 'locked in' to 2cc and face the concerns raised above by LoungeLizard.

I also note that Basil has now gone from 'Supremely Confident' to "Cautiously Optimistic."  GLH's.

More popcorn please.

[lorraina]

A lot of NZX companies have large controlling shareholders.
BGP 77.1%
VCT.75.1%
MCK.75.8%
AFT.69.5%
SPN.66.5%
CDL 65.3%
DGL.66.1%
GXH 63.4%
NPH 55%
WIN.55%

On USX
GFL..63.1%

I must like companies with the owner's eye as I own shares in AFT>CDL>SPN>DGL>and GFL..

[Basil]

"Despite that extra information, my feeling is that it changes nothing. I think all up , David Sena could rustle up an extra $2.6m, on top of the ANZ loan facility already negotiated. Although the offer document doesn't say so, I think he could access that money if it is required to pay shareholders more than the original 80cps offer price.

$2,6m extra on 10.8m shares is another 24 CPS.
Add in potentially another, up to, 6 CPS fully imputed dividend that the company could declare in early October as an early dividend for 1HFY27, (I estimate 1HFY27 profit at ~ $3m , approx 6.7 cps) that potentially takes estimated funding capability up to $1.10 per share.  In my view the exceptionally strong trading in the first half, along with a balance sheet as clean as a whistle is a very bankable proposition for an extension to the ANZ loan facility that was originally organised way back in April.

Thus there is still considerable risk that dissenting shareholders will become 'locked in' to 2cc and face the concerns raised above by LoungeLizard.

Lorriana has addressed that point above very well.  Further I note that MCK is now ~ 84% owned by CDL after their failed takeover attempt that concluded in May 2025 and nothing untoward has happened to the company since then and they just announced a very satisfactory first half result. 

I also note that Basil has now gone from 'Supremely Confident' to "Cautiously Optimistic."  GLH's.
More popcorn please.

To be clear, I am very confident that 80 cents will not work.  Clearly there's two other outcomes and either of them could happen but if you look at the history of takeovers in N.Z. there's almost always a higher offer when the first one looks destined to fail.  No its not a certainty but the odds based on history are very good.

Order in a whole van load of popcorn, there's plenty more drama to come with this one starting with another trading update for July, due tomorrow.  The Annual meeting has to happen under the listing rules by no later than 30 September and is bound to be a lively event this year.  It wouldn't surprise me in the slightest to see a higher offer on the table before the meeting but yes, there's absolutely the possibility one won't happen, I think we're all fully cognisant of that.  Disc: I still hold a meaningful amount of MCK shares.