Bapcor bid gives Hellaby shareholders easy exit
Friday 30 September 2016 04:14 PM
Bapcor bid gives Hellaby shareholders easy exit, avoiding showdown, CEO Abotomey says
By Paul McBeth
Sept. 30 (BusinessDesk) - ASX-listed Bapcor's $322.5 million takeover offer gives existing shareholders an easy exit from a traditionally thinly traded stock and would avoid the fall-out of automotive firms going head-to-head, chief executive Darryl Abotomey says.
The Preston, Victoria-based company is offering $3.30 a share, entering into lock-up agreements with Salt Funds Management, Accident Compensation Corp and Hugh Green Holdings' Castle Investments, securing almost 30 percent of the NZX-listed firm. The deal would give Bapcor, Australia's largest automotive aftermarket parts, accessories and services supplier, a foothold from which to build a larger New Zealand operation.
"It's the most logical entry for us and the most logical for Hellaby too. If we came in a different angle, there's no doubt it's going to affect both businesses adversely," Abotomey told BusinessDesk. "The major shareholders are in a position where they were happy to exit at that price, and they're long-term holders, so you have to look at it and say 'is the timing right?' We think it is."
Hellaby managing director Alan Clarke has said the board sees significantly more value in the company than the offer, which he said took him by surprise when he was on an investor roadshow.
Bapcor's Abotomey says they approached Hellaby earlier this year but was rebuffed and doesn't want to characterise the bid as a hostile or aggressive, given the companies already do business together.
He rejected commentary that the premium was too small, saying it was 18 percent higher than the three-month volume-weighted average price, and 23 percent above the 6-month VWAP.
"It's been a perennially underperforming stock," he said. "It's a good offer for people to get out cleanly."
Hellaby's shares have climbed above the offer price, recently trading at $3.32, and when asked whether Bapcor would be willing to sweeten the bid, Abotomey said "we'd never say never".
"That's what we believe is fair value, but we'll see how things roll over the next few months, and if we think it's appropriate to change, we will," he said.