The $10 per share takeover offer for dental and radiology specialist Abano Healthcare is deemed ``fair'', but analysts want more details from those offering the deal.
Dissident shareholder group Peter and Anya Hutson and James Reeves, as Healthcare Partners, already have a 19% stake in Abano, but last Friday they launched a $10 per share bid to gain a controlling 50.01% interest in the operator.
Healthcare Partners is proposing widespread changes.
Mr Reeves and Mr Hutson were unsuccessful in a $6.97 per share takeover bid in 2013.
Craigs Investment Partners broker Peter McIntyre said while the $10 price ``looks right'', he noted existing shareholders would not be able to sell all their shares, and after completion there would be ``a radical change in Abano's growth strategy''.
``We'd like to see more details and we retain our `hold' [stock recommendation] for now,'' Mr McIntyre said.
Abano's board has similarly asked shareholders to wait until the board has had time to consider the offer and make its recommendation.
Mr McIntyre said the $10 offer was 15% above Craigs' prior-to-offer valuation of $8.70, and offered a 21% premium to three- month average price, which was consistent with the median premium of 21% that has been paid in the past for control of NZX companies since 2005.
``While the bid price looks fair, Healthcare Partners has made it clear that it will radically change Abano's growth strategy.
``That includes ceasing acquisitions, slashing costs, some of which relate to acquisitions, and an attempt to improve margins and focus on repaying bank debt,'' he said.
Given it was a partial takeover, Mr McIntyre said he wanted more information on Healthcare Partners' plans for the business post-deal, including in respect of Abano's dividend stream.
Several risk factors were in play which resulted in Craigs' ``hold'' recommendation on the Abano stock.
Abano faced a translation risk to earnings from swings in the New Zealand and Australian dollars, with about half of Abano's earnings generated in Australia, Mr McIntyre said.
He said the high end dentistry Abano focused on was ``to a degree'' discretionary spending and also deferrable in tougher economic times.
``Spending is sensitive to the economic cycle,'' Mr McIntyre said.
Abano was exposed to competition for customers on a day to day basis and there was also competition from elsewhere to acquire dental practices.
``We see limited potential for synergies. Abano will still remain a listed company, after all,'' Mr McIntyre said.
Although not ruling out the potential for a competing offer from another party, Mr McIntyre said only four of the 34 takeover situations in New Zealand since 2005 resulted in revised offers.
