Ausgroup

Ausgroup: update on ASX listing. Ausgroup says it is considering to split its subsidiaries into a group headed by key subsidiary AGC Australia, and then seek a listing of AGC on ASX. As part of the proposed transactions, Ausgroup proposes to enter into a reverse takeover (RTO) and acquire suitable assets yet to be identified. If the proposed transactions are completed, it is intended that Ausgroup sh/h will receive shares in AGC under the distribution in-specie and still retain their shares in Ausgroup. Ausgroup sh/h will hold 100% of shares in AGC, which will be an Australian resources services co listed on ASX. However Ausgroup sh/h will see their Ausgroup shares heavily diluted following the completion of the RTO. The Board of Directors is of the opinion that this option provides better value to Ausgroup sh/h than the dual listing previously considered. This effectively means that the original Ausgroup business will seek a listing on ASX, with the shares of the new listco to be distributed to Ausgroup sh/h. Meanwhile, Ausgroup will acquire new businesses via an RTO. Overall, the group is expected to grow in size. While plans are still at a very preliminary stage, Ausgroup could see improved sentiment catalysed by expectations of positive corporate action. The stock trades at 6.5x P/E.