Healthcare Partners grumbles over Grant Samuel's valuation of Abano bid

Tuesday 20th December 2016

Grant Samuel has come in for a second barracking in the space of a month with HealthCare Partners, which accused the independent adviser of plumping up the valuation of Abano Healthcare.

Healthcare Partners, the investment vehicle of Anya and Peter Hutson and James Reeve and cornerstone shareholder in Abano, says Grant Samuel's valuation range for Abano of $9.95-to-$11.96 per share is based on assumptions that project more acquisitions than the historical average, overestimate Abano's ability to sustain earnings from the dental practices, and has a higher earnings multiple than its 2013 assessment while Australian same-store sales are declining.

"We consider some of Grant Samuel's assumptions to be unrealistic and inflate their valuation," Healthcare said in a letter to Abano shareholders. "We want to improve Abano's performance for the benefit of all shareholders."

Healthcare offered $10 a share, including a 14 cent dividend, to build a 50.01 percent controlling stake in the healthcare investor, in a partial takeover bid that's been rejected by the board as being too low.

Peter Hutson and James Reeves criticised the Grant Samuel valuation when they last mounted a bid for Abano, commissioning their own report by KordaMentha which suggested the target company's adviser overvalued Abano's shares.

The Hutsons and Reeves poured about 4.1 million shares, or 19 percent of Abano, into the Healthcare Partners entity, and if the bid is successful, they would seek changes to improve the company's performance by halting acquisitions in the medium term in order to reduce debt, while improving the dental practices' operations. They would also install three new directors.

The criticism of Grant Samuel comes less than a month after a separate independent adviser's report was panned by ASX-listed Bapcor, a prospective buyer of NZX-listed Hellaby Holdings. The Australian automotive company complained the Grant Samuel report incorrectly excluded Hellaby's corporate head office costs from the valuation, which would cut Hellaby's value by 42-to-48 cents a share.

On top of the Hellaby and Abano takeovers, Grant Samuel has also worked on the partial takeover of Airwork Holdings, the Silver Fern Farms transaction with Shanghai Mailing Aquarius, Tenon's sale of its US operations, the Nuplex Industries takeover, and the Sky Network Television/Vodafone New Zealand merger.

Last year Grant Samuel's report used by Cue Energy Resources to fend off a takeover by New Zealand Oil & Gas was criticised as "materially" overstating the target company's value by a Woodward Partners report for its clients.

BusinessDesk.co.nz

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