The Pargesa group simplifies its structure
Thursday, 12.03.2020
news-single-imgcaption" style="width:240px">The exchange offer (OPE) is expected for April 22, 2020. (Keystone)
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Parjointco, majority controlled by the Desmarais and Frère family groups, currently owns 55% of Pargesa, while the latter’s assets currently consist only of a 50% stake in GBL. Pargesa shareholders will receive 0.93 GBL shares (Groupe Bruxelles Lambert) in exchange for each Pargesa bearer share, which implies a premium of 16% compared to the closing prices of Pargesa and GBL shares on March 11, 2020.
The transaction is expected to allow Pargesa shareholders to benefit from a double-digit increase in dividend per share. In addition, an increase in the free float and therefore in the liquidity for shareholders will take place. Pargesa’s board of directors supports the transaction. The exchange offer is expected to take place on April 22, 2020. Completion of the transaction will be completed by the third quarter of 2020. Pargesa will be delisted after completion of the transaction. GBL is listed on Euronext Brussels.
A similar structural simplification took place with other portfolio companies listed on the stock market, including Société Internationale Pirelli (then listed on the Swiss equity market), many years ago, or with Eurazeo which is listed on Euronext Paris.
Focus on GBL
Following the various strategic initiatives and restructuring implemented over the years, Pargesa’s assets today consist almost exclusively of the 50% stake in GBL, representing almost 100% of the net asset value (NAV) from Pargesa. The existence of a separate listed holding company is no longer necessary.
The current holding structure results in a double discount for Pargesa shareholders, which increases the total discount for Pargesa shares compared to the net value of GBL’s assets; Pargesa bearer shares are currently being traded at a 39% discount (as of March 2020) versus 28% for GBL.
Following the execution of the transaction, it is expected that Parjointco will retain de facto control of GBL, it is doubtful. The agreement between the two family groups was further extended in 2012 until December 31, 2029, with the possibility of renewal. The reorganization will simplify the group’s structure and serve as a catalyst to create shareholder value, according to Paul Desmarais Jr, chairman of Pargesa’s board of directors.
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