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Takeover target Hellaby hints at possible breakup on its own terms

Thursday 8th December 2016

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Hellaby Holdings, which is engaged in a battle to fend off unwanted suitor Bapcor, has told shareholders it could move to break up the company to realise shareholder value. 

Australian car parts company Bapcor raised its offer to $3.60 a share earlier this week from $3.30, but the independent directors of Hellaby said they could not recommend the offer unless it included an 18 cents per share dividend. Bapcor has refused this, and the Takeovers Panel has now ruled the offer price of $3.60 per share is a last and final offer. 

Steve Smith, Hellaby chairman, said the offer price still did not reflect fair value for the shares. 

“Your company has other options. We could continue under our growth strategy, communicated in May 2016, which we believe will deliver attractive long-term value to shareholders, or we too could break up the company and realise the value embedded in each group in an orderly and careful process over time."

Bapcor is planning to delist Hellaby if its takeover is successful and focus on the automotive segment. The equipment, resources and footwear businesses would be sold. 

The Australian company has the support of 40 percent of investors at $3.60 a share, and today's update from Hellaby highlights that if Bapcor controls more than 50 percent of the shares, it could become the majority shareholder. 

"If Bapcor did so, it would represent a different set of risks and opportunities for Hellaby shareholders....this scenario would pose a number of significant complexities for Bapcor as it would not be able to fully realise the synergies of complete ownership," the note to investors said. 

Bapcor requires 90 percent of shareholders for the full takeover offer to succeed. 

Hellaby shares traded at $3.03 prior to the takeover offer emerging. Late afternoon today, they up 0.3 percent on yesterday's closing price, at $3.46. They've risen 17 percent since the start of the year.

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