Wednesday 28 September 2016 01:25 PM
Hellaby board sees 'significantly' more value in company than Bapcor's $322.5M bid, MD Clarke says
By Paul McBeth
Sept. 28 (BusinessDesk) - Hellaby Holdings' board sees more value in the automotive and resources services investor than the "opportunistic" $322.5 million takeover bid on the table from Australia's Bapcor, managing director Alan Clarke says.
The company was blindsided by Bapcor's $3.30 a share offer yesterday, which was an 8.9 percent premium to the trading price before the announcement, getting a phone call from Bapcor less than an hour before Hellaby lodged a notice to the stock exchange. The shares rose to offer price, which Hamilton Hindin Greene director Grant Williamson said indicated there might be a "sweetener" still to come.
Clarke has cancelled the rest of his investor roadshow to fly back to Auckland and formulate a response to the offer, including the appointment of an independent adviser. The board yesterday "strongly" recommended shareholders put off selling until it provides more guidance.
"The board is quite clear that we believe that the value attributed in the offer undervalues Hellaby," Clarke told BusinessDesk. "We have heard the commentary that it's opportunistic and we don't disagree with that. We see the value as significantly more than that."
Clarke joined Hellaby in November last year, having headed up medical services investor Abano Healthcare where he fended off multiple takeover bids.
Since then, Clarke has been at pains to reshape the company's portfolio to stop it being identified as a diversified investment firm, an investment type out of favour with analysts who struggle to value future earnings for a broad array of businesses.
That's seen Hellaby organise the sale of its equipment business to Maui Capital for $81 million, which will settle at the end of the week, buy maintenance and engineering contractor TBS Group to bolster its resources services unit, and appoint consultants to try and improve the fortunes of the footwear division which is still slated for an exit.
"There was a good response by the market to the new strategy, direction and process, so prior to any Bapcor involvement we were sitting at $3.20 (including dividend) and that was an endorsement," Clarke said. "In relation to that strategy, we have engaged with all of the parties, including the lock-up parties. We've spoken to them about the strategy, we've articulated direction and so on. There has been a frustration by a number of holders at the lack of progress within the share price."
Bapcor has secured a near-30 percent stake in Hellaby, entering into lock-up agreements with Salt Funds Management, Accident Compensation Corp and the former Hugh Green Holdings, now called Castle Investments. The ASX-listed automotive group wants to delist Hellaby with a view to selling its other businesses and keeping the automotive unit as a means to establish a foothold in New Zealand.
The Australian firm may waive the condition to achieve 90 percent, providing it gets more than half of the shares on issue and Overseas Investment Office approval, in which case it would seek board representation to push for a shift in Hellaby’s direction.