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WAM Leaders (ASX:WLE) launches takeover bid for QV Equities (ASX:QVE)

WAM Leaders Ltd (ASX:WLE) has decided to launch a takeover offer bid for the LIC QV Equities Ltd (ASX:QVE).

WAM Leaders Ltd (ASX: WLE) has decided to launch a takeover bid for the LIC QV Equities Ltd (ASX: QVE).

WAM to continue its acquisitive streak

The Wilson Asset Management (WAM) listed investment companies (LICs) have acquired a few other LICs in recent years, particularly WAM Capital Limited (ASX: WAM).

WAM Leaders has announced it intends to make an off-market takeover bid for QV Equities. The offer is 1 WAM Leaders share for every QV Equities 1.4675 shares.

Based on the WAM Leaders share price on 30 January 2024, the offer represents $0.95 per share of implied value for QV Equities shareholders, adjusted to include payment of the QV 1.3 cents per share dividend announced yesterday.

This offer represents a premium of 5% to QV Equities’ share price on 30 January 2024.

There are a few conditions including 50.1% minimum acceptance, no change to the investment management agreement, no material transactions, no material adverse change, no share market fall of at least 5% and so on.

The LIC also said it has separately proposed to the QV Equities board of directors the possibility of entering into an agreement to buy 100% of QV Equities shares through a scheme of arrangement.

What are the benefits of this deal?

WAM Leaders tried to sell the deal to QV Equities shareholders by saying there is a “stable and clearly articulated investment strategy” with long-term investment portfolio outperformance. WAM Leaders’ investment portfolio has outperformed the S&P/ASX 200 Accumulation Index (ASX: XAOA) by 4.4% per year.

There is a higher dividend yield, with a history of growing dividends and a larger profit reserve.

It also suggested there could be a reduced management expense ratio as a result of the removal of duplication of expenses.

For WAM Leaders shareholders, it is expected that the LIC’s net assets will increase by approximately $229 million, and it would benefit from buying QVE shares at a discount to their current underlying pre-tax NTA.

Final thoughts

WAM Leaders is a strong-performing LIC and added scale would come with some benefits, though being larger can make strong investment returns a little trickier because it makes it harder to buy and sell shares at a great price, or invest in smaller businesses in a meaningful way.

I think it’s one of the more attractive ASX dividend shares though.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

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