In an unusual move, shareholders of hostile takeover target Hellaby Holdings have been put under pressure by the majority shareholder in the diversified investment company to accept the $3.30 offer from listed Australian auto-parts company Bapcor.
For the past week, Bapcor and Hellaby have been in a war of words, via NZX postings, over aspects of the valuation of parts of Hellaby, with the former claiming its $3.30, or $332 million, offer is within a fair range, but Hellaby countering with claims $3.30 is not enough.
The foundation of Bapcor’s takeover play is based on it already having agreements with three Hellaby shareholders to sell it 29.84% of Hellaby, which includes the 27.2% stake held by Castle Investments.
The 27.2% Castle Investments stake is worth about $87.5 million, under the $3.30-per-share, $332 million Bapcor offer.
Castle Investments Ltd is ultimately owned by the Hugh Green Trust, and its trustees Chris Darlow and David Randell and family representatives and beneficiaries John Green and Maryanne Green, released a statement in support of the Bapcor offer yesterday, an unusual move in a hostile takeover battle.
Castle Investments has held the Hellaby stake for 20 years and said after Bapcor approached it, the $3.30 was determined as "compelling" above its view of fair value and in accepting, would deliver Castle Investments "the highest value".
"Whilst Castle Investments would welcome an increase in [Bapcor’s] offer price, we would be most disappointed if Bapcor walked away from the offer," the shareholder notice said.
Hellaby’s board has repeatedly asked its shareholders to seek professional advice, but otherwise reject and ignore the offer, saying the offer undervalued Hellaby.
Castle’s statement countered that Hellaby’s "growth aspirations" carried a high degree of risk and uncertainty, a risk Hellaby’s share price pre-offer could retreat to $2.90 and numerous aspects of the independent Grant Samuel valuation of Hellaby; largely concerning annual head office costs of $6.6 million.
Hellaby’s independent directors responded to the Castle statement, again recommending shareholders reject Bapcor’s offer.
