Takeover target PSC Insurance Group insists it has complied with sharemarket listing rules that dictate a company should immediately disclose information that could affect its valuation.

The broker network was responding to compliance questions posed in a May 10 letter from the Australian Securities Exchange following Ardonagh’s $2.3 billion offer for the company. 

PSC released a statement on March 13 saying it had received strategic approaches and was in discussions that “may or may not lead to an offer being made”. Its next update at about 5.19pm on May 8 announced the Ardonagh deal at $6.19 cash per share.

PSC’s March statement followed an Australian Financial Review Street Talk article the day before and a question from the ASX.

The Australian then published an article on April 9 flagging potential buyers, and another article on April 30. On May 6, the newspaper cited unnamed sources to report Ardonagh was closing in on a $2 billion acquisition and a deal could be agreed in about two weeks.

The ASX’s letter, released last week, notes PSC’s shares rose from a May 3 close of $5.22 to a high of $5.44 on May 6 following the latter article, representing a 4.2% increase.

The sharemarket says it received verbal confirmation from PSC at 1.45pm that day that the board had not made a decision regarding the proposed acquisition and it was not aware of any material information requiring disclosure, while noting the article appeared speculative.

PSC says in its responses to the ASX letter that it did not believe information in the article was “significantly additive” to previous press speculation.

In the company’s opinion, there was no information in the article that would be likely to change the market’s view of the situation given the March 13 release and subsequent press speculation, and the addition of speculation on timing was not a material price factor.

“The article was speculative as there was no certainty of the terms of the deal (including pricing) or the proposed transaction proceeding at the time the article was published,” PSC says.

“The fact that certain aspects of the article proved to be accurate when the deal was finally concluded does not change the nature of the article as ‘speculative’ at the time that it was published.”

PSC says it received “a number of” strategic approaches late last year and, as a result, appointed Goldman Sachs in December to advise on potential strategic options.

The broker engaged with a number of parties in January, including Ardonagh, subject to confidentiality and standstill arrangements. Initial due diligence followed, and PSC received confidential non-binding indicative offers, including one from Ardonagh on January 29.

“PSC then proceeded to negotiate terms for a proposed acquisition of the company and worked with Ardonagh, which culminated in the announcement of the proposed acquisition,” the company says.

The board met on May 7 at 5.30pm to consider approval of the proposed acquisition, with some issues still subject to finalisation. It also considered whether it should disclose anything further to the market.

“The board concluded that no further announcement was required,” PSC says. “This was on the basis that the transaction remained incomplete, that final terms continued to be negotiated and, in the absence of funding commitments, there was not sufficient certainty of the deal proceeding for any material additional information to be given to the market above that already disclosed.”

PSC says it worked with Ardonagh throughout the evening of May 7 and during the next day to finalise terms and conditions. Ardonagh received final confirmation on funding and its necessary approvals about 5pm on May 8, and that was provided to PSC at 5.09pm. The scheme implementation deed was then signed and exchanged, and an announcement made to the market.

PSC’s shares rose to a high of $6.05 on May 9.