Hellaby's Holdings' board has done an about-face and recommended shareholders get on board with the hostile takeover by Australian company Bapcor, given the 56% acceptances to date and its likelihood of strategic changes in the offing.
Bapcor's $3.60-per-share offer, for $351.8 million, had been rejected by Hellaby since it was disclosed last October, as undervaluing the company, but yesterday board members resigned themselves to the inevitable and recommended shareholders accept.
Hellaby chairman Steve Smith said while the independent directors still believed the $3.60 offer price ``potentially undervalues'' Hellaby, Bapcor's control of a majority shareholding added significant risk to any future delivery of additional value to shareholders.
``Given that change of circumstances, the independent directors are recommending that shareholders accept the offer,'' Mr Smith said in a statement.
The Hellaby board's primary focus during the takeover was to optimise shareholders' value and he was pleased Bapcor increased its initial offer by 30c, delivering an additional $29.3 million in shareholder value.
Craigs Investment Partners broker Peter McIntyre said it was a ``hard-fought and hostile bid'' by Bapcor and Hellaby's board yesterday ``acknowledged the inevitable''.
``Bapcor has got control of the business [56%] and has the ascendancy at boardroom level,'' he said.
Mr McIntyre said the two shoe chains owned by Hellaby were ``well outside'' Bapcor's core business interests, and saw Hellaby's 120 outlets as the ``jewel in the crown'' of the takeover, and by far the largest contributing division of $795 million of Hellaby sales for the year to last June.
Bapcor now has 750 Australian automotive parts outlets, plus Hellaby's 120 in New Zealand.
Mr McIntyre expected both of Hellaby's shoe chains would in the next 12 to 18 months be divested by Bapcor, but ``not necessarily on giveaway'' terms.
Mr Smith said reasons for the changed recommendation were that Bapcor now had a majority shareholding and planned to appoint a majority of its directors to Hellaby's board.
Shareholders who decided to retain their Hellaby shares would be in a minority position with little influence and Bapcor had a different strategy to Hellaby's present board, Mr Smith said.
Hellaby's new board would be able to re-set strategy, including potential divestment of existing businesses, change Hellaby's capital management and its dividend and borrowing policies, he said. Bapcor's $3.60 offer has been extended to February 7.
