Abano to sell stake in Bay International to Hutson interests

The transaction follows an unsolicited approach from an international hearing device manufacturer.

Abano Healthcare Group [NZX: ABA] has agreed to sell its 50%  stake in audiology company Bay International to interests associated with Peter Hutson for $32 million. The listed medical and dental centre investor also said earnings would be at the top end of guidance.

The transaction follows an unsolicited approach from an international hearing device manufacturer, which triggered Hutson's pre-emptive rights under Bay's shareholder agreement, which allowed him to acquire the shares at the same price, the Auckland-based company said in a statement.

Last month, Abano said it received an approach from a third party it didn't name offering almost three times book value for its share of Bay, which owns Bay Audio, an audiology retail network in Australia with a smaller footprint in South East Asia.

Abano chief executive Richard Keys said the sale would generate a surplus over book value of approximately $20 million once Abano's A$1.8 million share of Bay Audio Australia's deferred tax asset was recognised. The sale was in keeping with Abano's focus on its growing transtasman dental business.

Abano said excluding the impact of the Bay sale, its results for the 2016 financial year would be at the top end of the $8.2 million to $9 million underlying profit guidance it gave on April 7. Profit in 2015 was $8.8 million, or $5.6 million excluding two businesses it has since sold.

Proceeds from the Bay sale will be used to repay debt and help fund Abano's continued expansion of its Lumino The Dentists network in New Zealand and Maven Dental Group in Australia, Keys said.

Settlement of the sale is expected in the next three months.

Abano shares last traded at $7.65 and have edged up 1.6% in the past 12 months.