SYDNEY: Australian United Investment Company Ltd (AUI.AX) on Friday announced a proposed merger with Diversified United Investment Ltd (DUI.AX), creating a combined listed investment entity with an equity value of approximately A$2.53 billion ($1.7 billion).
The all-share deal, structured as a scheme of arrangement, will see AUI acquire all DUI shares it does not already own. DUI shareholders are set to receive 0.4815 AUI shares for each DUI share held, based on the latest pre-tax net tangible asset figures. The exchange ratio will be finalized five business days before a shareholder meeting scheduled for April 2026.
The merger combines two investment companies with long-term portfolios and similar philosophies, both known for maintaining fully franked dividends without a reduction for 30 years. AUI highlighted annual cost savings of about A$700,000, or 21% of combined operating costs, as a key rationale.
“The larger size and increased liquidity from combining AUI and DUI may lead to a reduction in the trading discount to the underlying investment portfolio,” AUI said in a statement.
AUI currently holds a 6.8% stake in DUI and has also secured a call option to acquire an additional 13.1% stake from The Ian Potter Foundation, a long-term shareholder in both companies, if a competing proposal for DUI emerges.
The deal is subject to approvals from shareholders of both companies and the Federal Court of Australia, as well as other customary conditions. AUI said it expects to maintain its current annual fully franked dividend of 37 cents per share post-merger and pay a special dividend of 8 cents per share in each of the next four years.
Charles Goode, chairman of both companies, will recuse himself from DUI board discussions on the merger, acting solely as AUI’s chairman during the process.
The Australian Securities Exchange has confirmed it will not require AUI to seek fresh shareholder approval under listing rules related to back-door listings, citing the similar nature of both entities.
($1 = 1.4874 Australian dollars)
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