Activist investment manager Sandon Capital Investments has entered into an agreement to acquire a stake in a listed investment company.
ASX-listed Sandon Capital is expected to acquire nearly 53 million shares in Mercantile Investment Company (MVT), which represent 18.87% ownership.
Sandon will acquire the interest from Siblow, an entity controlled by Ron Brierly.
In Sandon's letter to Mercantile, it says the acquisition has potential to create value for both companies.
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This includes: an increase in liquidity, greater opportunity to diversify investments and economies of scale.
If Sandon successfully completes the offer, it expects consolidated assets to increase by 217% from $45 million to $142.5 million, and total equity interests to more than double from $43.6 million to $142.5 million.
Under the agreement, Sandon will issue fully paid ordinary shares to Siblow in consideration for Mercantile shares.
It expects to complete the acquisition before June 18.
Sandon is the investment manager of the ASX-listed Sandon Capital Investments (SNC), an unlisted investment company and two other wholesale funds.
Last year, Mercantile made an unsuccessful off-market takeover bid to acquire all ordinary shares of Yellow Brick Road for 9 cents per share.