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UPDATE: Abano investors Hutson, Reeves seek control in partial takeover offer at $10/share

Friday 4th November 2016

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Abano Healthcare Group's dissident shareholders Anya and Peter Hutson and James Reeves are seeking control of the dental clinic and radiology operator in a partial takeover offer, though the company recommends shareholders wait for the board's guidance before acting. 

The group wants to buy 30.99 percent of the company, or 6.65 million shares, at $10 apiece to build a controlling 50.01 percent stake in Abano, via a new entity they've set up called Healthcare Partners Holdings, they said in a statement. The offer is a 27 percent premium to yesterday's closing price of $7.90, and the shares have since climbed 14 percent to $9. 

Abano's board said it wasn't in a position to comment and strongly recommended shareholders hold off from making any decisions until the directors provide some guidance. The board will meet shortly to consider the notice and appoint an independent adviser to appraise the deal. 

Peter Hutson and Reeves have been lobbying for change at Abano for several years, supporting an informal takeover bid in 2013 by Archer Capital at $6.97 a share, which would have seen the Australian private equity firm take the healthcare investor's dental businesses and hand the audiology units to Hutson for a nominal sum. 

The offer was turned down by the Abano board as being too low. Archer was refused due diligence access because it could become a direct competitor to Abano, and Peter Hutson left the board. They later tried to oust chairman Trevor Janes, calling a special meeting of shareholders, though the resolution was voted down, and they unsuccessfully opposed Janes' re-election at the company's latest annual meeting. 

"We have had concerns about Abano’s performance for a number of years. In 2013, when Peter was a director of Abano, we approached the company to try to achieve change; but shareholders didn’t agree with the way we approached it and asked us to make an offer for the company," they said. "We have learnt from that and hence Healthcare Partners is making an offer this time of $10 per share to take its holding to 50.01 percent." 

If the bid is successful, the Hutsons and Reeves will seek changes to improve the company's performance by halting acquisitions in the medium term in order to reduce debt, and improving the dental practices' operations. They would install three new directors.

Last month, Abano told shareholders it expects to lift first-half profit by up to 50 percent in 2017 due to dental acquisitions, which it sees as its major growth platform. 

The Hutsons and Reeves poured about 4.1 million shares, or 19 percent of Abano, into the Healthcare Partners entity, which has been set up to buy and hold shares in Abano and undertake any other investments in the healthcare industry as agreed by its shareholders. 

Healthcare Partners' three directors are Anya and Peter Hutson and James Reeves. The holding company is three-quarters owned by the Hutsons and a quarter by Reeves' Steamboat Capital SPV entity.

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