Home / Daily / AUB's Coverforce acquisition 'could have gone ahead': judge
12 December 2019
A judge has decided that AUB Group’s abandoned acquisition of Coverforce Holdings could have proceeded.
AUB announced on Monday that it had ditched the deal after failing to gain access to key documents within a set timeframe.
In August AUB said it had agreed to buy a 49% stake held by private equity investor Pemba Capital Partners. It said it would then acquire the remaining equity in a deal valued at around $150-200 million.
But Coverforce CEO and founder Jim Angelis argued the company’s management held a 56% interest in Coverforce, and Pemba did not have authority to undertake a sale.
A revised shareholders’ agreement was put in place after Coverforce financed a management buyout of Resilium from Suncorp, led by Resilium MD Adrian Kitchin and associates. Mr Kitchin was allocated Coverforce shares as part of the deal.
Pemba insisted the original shareholders’ agreement remained valid and sought court orders in the NSW Supreme Court, which delivered its judgement on Tuesday – just one day after AUB announced it was abandoning the bid.
Justice James Stevenson found “there has been no valid allotment of shares in Coverforce to the Kitchin Parties” because Coverforce “did not have the requisite board approval”.
“But for AUB’s announcement…Pemba would have been entitled to proceed with the sale to AUB,” Justice Stevenson said.
The court says Mr Kitchin and his associates can either “unwind” the Resilium transaction or “recover damages” from Coverforce.
More details will be included in the insuranceNEWS.com.au Daily briefing tomorrow.