Background
Steadfast Group Ltd, an ASX-listed insurance-broker and agency-network operator, entered a scheme implementation deed with Starboard BidCo Pty Ltd and Amwins Australasia Group Pty Ltd. Under the proposed scheme, Starboard BidCo—a vehicle ultimately associated with KKR and Dragoneer—would acquire all Steadfast shares for $6.00 per share, reduced by permitted dividends. Steadfast had already paid a fully franked dividend of $0.1275 per share and could pay a further special dividend of up to $0.0725 per share.
Following implementation, Starboard BidCo proposed to sell Steadfast’s underwriting-agencies business to Amwins Australasia or an affiliate, while retaining its broking business. Steadfast applied under s 411 of the Corporations Act 2001 (Cth) for orders convening a shareholder meeting to consider the scheme.
The Court’s Holding
Black J made the requested first-hearing orders convening the scheme meeting. The Court held that the preconditions for exercising its discretion under s 411 were met: Steadfast was a Pt 5.1 body, the proposal was an arrangement within s 411, it was bona fide and properly proposed, ASIC had adequate notice and opportunity to review the materials, and the applicable procedural requirements had been satisfied.
The Court found no apparent reason the scheme could not later be approved if shareholders passed it by the statutory majorities. The directors unanimously recommended the scheme, subject to the absence of a superior proposal and the independent expert maintaining its conclusion; Kroll Australia concluded that the proposal was fair and reasonable and in shareholders’ best interests. The Court also accepted the disclosed deal-protection provisions, treatment of incentive rights, bidder funding arrangements, and shareholder communications arrangements. It dispensed with newspaper publication of notice of the second hearing, permitting ASX publication instead.
Key Takeaways
- This was a first-hearing decision: the Court did not approve or implement the scheme, but authorised shareholders to vote on it.
- The $6.00-per-share consideration fell within the independent expert’s control-value range of $5.44 to $6.09 per share.
- Funding evidence and the requirement to place scheme consideration into trust before implementation sufficiently addressed performance risk for the special-purpose bidder.
Why It Matters
The decision confirms the Court’s gatekeeping role at the first stage of a scheme of arrangement. The question is whether shareholders can properly consider a bona fide proposal that appears capable of later approval—not whether the Court should itself decide the commercial merits of the transaction.
It also illustrates the disclosure and evidentiary focus for large private-equity-backed acquisitions, particularly where the bidder is a special-purpose vehicle and the transaction includes post-completion asset transfers and multiple funding sources.