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UPDATE: Hellaby shares climb 8.6%, almost matching Bapcor's $322.5 mln takeover offer

Tuesday 27th September 2016

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Hellaby Holdings shares climbed 8.6 percent to $3.29, just below the price offered by Australian-listed autoparts firm Bapcor's $322.5 million takeover bid. 

The NZX-listed company's board said it "strongly recommends" shareholders put off selling until it provides further guidance, and will meet to consider the takeover notice and appoint an independent adviser. Preston, Victoria-based Bapcor is offering $3.30 a share to take full control of Hellaby, an 8.9 percent premium to yesterday's closing price of $3.03, and has secured acceptances totalling almost 30 percent, according to a notice to the stock exchange. Bapcor wants to delist Hellaby, and plans to sell the equipment, resources and footwear businesses to focus on the automotive segment.

"It's a very small premium to pay for a 100 percent takeover, I don't think there's any doubt about that," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. "The shares have been trading around $3.29, $3.30, so some investors might already have come to the conclusion that there might be a little sweetener." 

Hellaby has been overhauling its portfolio and investment strategy under new managing director Alan Clarke, who took over the reins last November, to exit non-core businesses and focus on its automotive and resource services units. Last month the investment firm posted a 30 percent decline in annual profit to $19.6 million, having lowered earnings guidance earlier this year.

Bapcor chief executive Darryl Abotomey said the deal would let the company "enter the New Zealand automotive parts market and use its scale and proven industry expertise to improve the service and range of products offered in New Zealand, while looking for opportunities to expand, as it successfully has in Australia." 

If it doesn't succeed in taking over Hellaby it plans to enter the New Zealand automotive market either organically or through an acquisition, the takeover notice said. 

Salt Funds, Accident Compensation Corp and the former Hugh Green Holdings, now called Castle Investments, have agreed to sell to the Australian company.

"Bapcor believes that no other competing takeover is likely to be forthcoming given that certain Hellaby shareholders have irrevocably agreed to accept this offer," it said.

Williamson said Bapcor has made a number of acquisitions to expand its Australian business and has been a very good performer compared to Hellaby, which has "lagged behind the market quite seriously over the last few years." 

The Australian firm may waive the condition to achieve 90 percent, providing it gets more than half of the shares on issue and Overseas Investment Office approval, in which case it would seek board representation to push for a shift in Hellaby's direction.

The deal will be funded through debt from Australia & New Zealand Banking Group and A$185 million of new equity raised through a fully underwritten A$165 million institutional placement, and A$20 million share purchase plan.

The placement and share purchase plan were priced at A$5.85 a share, a 5 percent discount to yesterday's closing price of A$6.16. Trading in the shares was halted pending the stock offering.

BusinessDesk.co.nz

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