On Nut Road Limited Launches A$55 Million Play for Donaco in All-Cash Deal

Industry Headwinds Open the Door for Shareholder Certainty

The Asian gaming and entertainment sector faces increasing complexity as regulatory shifts and border operational risks continue to challenge smaller operators. Against this backdrop, Donaco International Limited (ASX:DNA) has announced a proposed acquisition by On Nut Road Limited (ONR), an Argyle Street Management (ASM)-backed investment vehicle.

A 50 Per Cent Premium on The Table

ONR, which already holds 12.84 per cent of Donaco shares on issue, has entered into a Scheme Implementation Deed (SID) to acquire the remaining shares for A$0.045 in cash per share. This represents a 50 per cent premium to Donaco’s last closing price and a 54.10 per cent premium to the 90-day volume-weighted average price.

“We have carefully considered the merits of this offer,” said Donaco’s Non-Executive Chairman, Mr Porntat Amatavivadhana. “ONR’s proposal provides compelling value for shareholders at a time of ongoing structural challenges.”

Valuing Stability and Certainty

The scheme values Donaco’s equity at approximately A$55.59 million on a fully diluted basis. For shareholders, this cash exit provides certainty in an industry increasingly exposed to volatility.

“While Donaco has performed steadily post-pandemic, the reality is that profit margins remain slim, and investor confidence has been difficult to rebuild,” Mr Amatavivadhana added.

Challenges Intensify

The company highlighted several growing risks, including new gaming legislation in Thailand, which could divert patrons away from Donaco’s border casinos. Additionally, recent border tensions and power supply cuts between Thailand and Cambodia have impacted operations.

“Border disruptions and unpredictable electricity supply only compound the challenges we face,” Mr Amatavivadhana noted. “This offer arrives at a moment when de-risking for shareholders makes sense.”

Board Backs the Deal

The Donaco Board has unanimously recommended shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an independent expert report concluding (and continuing to conclude) that the Scheme is in the best interests of Donaco shareholders..

“We believe this transaction allows shareholders to realise value at an attractive premium, while also removing exposure to sector-specific risks that continue to mount,” Mr Amatavivadhana said.

Major Shareholder Support and Next Steps 

Backing from Donaco’s largest shareholders strengthens the proposition. Lee Bug Huy and Lee Bug Tong, who collectively hold a 42.17 per cent stake, have indicated they will vote in favour of the Scheme under the same conditions.

No immediate action is required from shareholders. A Scheme Meeting is expected in June 2025, where approval from 75 per cent of votes cast is required. The full Scheme Booklet, including the independent expert’s report, will be distributed in May 2025.

The SID includes standard exclusivity terms and break fee provisions of approximately A$500,000 on either side. Hamilton Locke is advising ONR, with Ashurst advising Donaco.

“Given the fundraising challenges and emerging regulatory changes, we believe this is the right path for our shareholders,” Mr Amatavivadhana concluded.

About the Buyer

ONR is a special purpose vehicle managed by ASM, a Hong Kong-based fund manager with over A$3 billion in assets under management. ASM has been a Donaco investor since 2019.

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Gracen Moore

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