Abano to sue biggest shareholder for takeover costs

James Reeves, Anya Hutson and Peter Hutson

Abano Healthcare Group will sue its biggest shareholder Healthcare Partners Holdings for unpaid costs stemming from the investor's latest attempt to wrest control of the medical services investor.

The Auckland-based company today kicked off legal proceedings in the High Court over $566,000 in unpaid costs arising from Healthcare's failed partial takeover bid, having incurred a $1 million bill over the tilt, it said in a statement. Abano offset those costs by withholding an interim dividend due to Healthcare of some $650,000 in January, and Healthcare's complaint to NZX was unsuccessful.

"The failed partial takeover attempt by Healthcare Partners was time consuming, costly and a distraction for Abano," chairman Trevor Janes said. "We do not see it as reasonable for Abano and its shareholders to be funding costs properly incurred in relation to Healthcare Partners unsolicited and unsuccessful bid."

Healthcare, the entity used by Peter and Anya Hutson and James Reeves, wanted to lift its stake to 50.01 percent from 19.02 percent, with a $10.16 a share offer, including the 16 cents per share interim dividend, but only attracted 3.6 percent. The group wanted to improve the company's performance by halting acquisitions in the medium term in order to reduce debt, while improving the dental practices' operations. They would also have installed three new directors.

Peter Hutson and Reeves have been lobbying for change at Abano for several years, supporting an informal takeover bid in 2013 by Archer Capital at $6.97 a share, which would have seen the Australian private equity firm take the healthcare investor's dental businesses and hand the audiology units to Hutson for a nominal sum.

The offer was turned down by the Abano board as being too low. Archer was refused due diligence access because it could become a direct competitor to Abano, and Peter Hutson left the board, and the Hutsons later bought out Abano's stake in the audiology business.

Peter Hutson and Reeves later tried to oust Abano chairman Trevor Janes, calling a special meeting of shareholders, though the resolution was voted down, and they unsuccessfully opposed Janes' re-election at the company's latest annual meeting.

Abano said it has incurred $2 million over the past three and a half years from the Hutsons' and Reeves' machinations, and that the group's baulking at paying those costs was a continuation of their efforts to "delay and avoid their financial responsibilities under the Takeovers Code".

The shares recently traded at $8.56, and have gained 1.9 percent so far this year.

(BusinessDesk)


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I love the way these highly skilled business people only ever have one card to play, withhold the dividend. Now they're going to cost their shareholders even more money by taking legal action against their biggest shareholder for doing something that they were perfectly allowed to do. If their legal action fails, who's going to pay the massive legal costs? not the bosses of the group, they'll still get their big fat paychecks. I'll take a bet with anybody that it will come out of the next dividend payout.

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It's not Abano fault that they've been on the end of three failed takeover attempts by Laurel and Hardy Ltd. Shareholders will probably be happy to send a strong signal to the failed acquirers that they are sick of the game playing and time wasting.

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Ivan I thought the Takeovers Code stated that all "properly incurred costs" that Abano incurred as a result of the proposed takeover were meant to be refunded to it by HPH. Are you suggesting that HPH can carry out multiple takeovers in the future and that Abano shareholders have to cover all the costs incurred by Abano every time this occurs?

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What a circus. The bidders are the major shareholders of the company are they not? Abano was not obliged to welcome their overtures but the best interests of the company would surely be served by negotiating a way forward with the major shareholder. Instead the company has had two priorities above all else - protection of its chairman in whom the major shareholder had openly lost confidence and trying to force that major shareholder to sell out. Neither are legitimate purposes to spend so much company money and time on. Hutson and Reeves may consider suing the Board for wasting their company's money in this way. Imagine how much wind would have been taken out of their sails had Abano simply engaged and accommodated some of their more benign requests early on? The dynamic between major shareholder and the company's chairman Trevor Jane is childish and destructive.

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