Fisher Funds says takeover bid undervalues Abano

Tuesday 15th October 2013

Fisher Funds Management, which took over Tower Investments earlier this year, says a takeover bid for Abano Healthcare Group undervalues the specialist medical investor.

Abano is facing a potential takeover bid by biggest shareholder and former director Peter Hutson, Australian private equity firm Archer Capital and investor James Reeves, valuing the firm at about $131.4 million, though no formal offer has been made. As part of the deal, Hutson, who is a co-investor with Abano in its Bay Audiology unit, would buy the audiology business after a successful takeover for a nominal sum.

"We believe that this proposed offer undervalues the company and this is also the view of the directors," Fisher Funds said in a monthly update for Kingfish, its listed fund which invests in the local sharemarket.

Fisher Funds holds about 8.8 percent of Abano, making it the second-biggest shareholder in the firm. The fund manager raised its stake in August with on-market purchases after the potential takeover was first announced.

Abano's board rejected the initial indicative offer from Archer as being too low, and turned down its request for due diligence on the basis that the private equity firm will likely become a competitor.

The company has previously fended off takeover attempts by Crescent Capital in 2008 and the Christchurch-based Stewart family a year before that.

It has since demanded Archer and Hutson say how much he will pay for the audiology business and are offering to buy him out at the same price.

Hutson resigned from the board last month after his fellow directors urged him to do so, saying he was conflicted by his involvement in the takeover bid.

The shares were unchanged at $6.65 in trading yesterday, and have gained 7.1 percent, lagging the 13 percent increase in the NZX All Index, a capital index of all domestic equities on the local bourse, over the same period. The stock is rated an average 'buy' based on two analyst recommendations compiled by Reuters with a median target price of $7.21.

BusinessDesk.co.nz

Comments from our readers

No comments yet