Craigs recommends Hellaby shareholders sell to Bapcor

Bapcor chief executive Darryl Abotomey
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HBY Hellaby Holdings
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Craigs Investment Partners has written to its clients recommending shareholders in Hellaby Holdings accept the offer from Bapcor at $3.60 a share.

Bapcor says it now owns just over 40% of Hellaby.

Shareholders in Hellaby were told the price of $3.60 provides "reasonable value against the Hellaby share price of $3.45, offers a 29% premium to the three-month volume weighted average price before the initial bid from Bapcor, and is above our wholesale analyst's $2.88 target price for Hellaby."

The note also warns the Hellaby investment case "holds considerable executive risk given the cyclical nature of parts of the business (Contract Resources) and the targeted exit of loss-making segments (Footwear). This means the path to realising significant shareholder value from Hellaby outside of this offer will take time and involves an element of uncertainty."

It's understood Craigs' clients account for about 14% percent of Hellaby Holdings shareholders.

Bapcor, the ASX-listed auto parts company, launched its bid for Hellaby in September, offering $3.30 a share.

It is aiming to achieve 90% ownership letting it enforce mop-up provisions to take the company private but may waive this condition if it controls more than half of the shares on issue and gains Overseas Investment Office approval, in which case it would seek board representation to push for a shift in Hellaby's direction.

The takeover has involved an escalating war of words between the two parties, with Bapcor taking issue with the independent adviser's report and Hellaby's directors seeking an additional 18c dividend on top of the $3.60 share price, a proposal rejected by Bapcor.

Hellaby shares fell 0.3%, or 1c, to $3.45. They were trading at $3.03 before the takeover offer. They've risen 18% since the start of the year.

(BusinessDesk)

 


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The is going to reflect poorly on the Board and the independent valuer in particular, given its ridiculous position on the head office costs.

I also recall Aaron Bhatnagar publicly stating he won't sell without a Board recommendation, so assuming his word is worth anything he faces being a minority shareholder now.

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Anonymous - don't be a smart alec and misrepresent my words.

Here's what I said in relation to the old price of $3.30 (NBR, Sept 28 2016)

"I certainly don't intend to sell at the current offer price unless the board of Hellaby Holdings recommend it to shareholders. My view, clearly stated above, is that I believe the company to be worth more than $3.30 per share. So I look forward to what a report commissioned by the board has to say, and the board's response to that report."

Naturally, I am delighted to have played a role in successfully agitating for an increase to the offer for Hellaby shareholders, and am considering the improved offer carefully. I note that there were a number of people who thought $3.30 was as good as it was going to be - how wrong were they???

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And you went on to say in your October opinion piece, that you thought they were worth $4 per share.

So its decision time. If you truly believed the $4 value, I'm assuming you will now hold, especially since there is no Board recommendation.

Alternatively, you can can be a bit of a hypocrite and sell, saying that 'things have changed'. Of course, there may be a modest risk in this approach that you breach Rule 64 of the Code (helpfully set out below), in that that your previous statements constituted market manipulation.

64 Misleading or deceptive conduct
(1) A person must not engage in conduct that is—
(a) conduct in relation to any transaction or event that is regulated by this code; and
(b) misleading or deceptive or likely to mislead or deceive.

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Oh dear, more smart alec nonsense. You continue to misread my words, or perhaps more mischievously, you misrepresent my comments.

My NBR comments (Oct 12th) said Hellaby would deserve to be worth $4 a share if they delivered $25m in FY17 earnings - e.g, next year. So that's a future projection of what they might be worth, if they delivered. Those earnings estimates are based on FNZC and Forbarr estimates.

Since you like the legalese around takeover offers, then you might like this. Bapcor may have broken NZX rules when increasing their offer on December 5th. They issued press releases at the start of the day, but didn't publish their variation of the offer with the NZX until three hours after the market opened! Perhaps the NZX should take a look at that?

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Looks like Bapcor will get to 50.1% and take control of Hellaby. Can Bapcor then remove the current Board????

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Yep 50.1% lets you do anything you like in the corporate governance world that is NZ.

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And fair enough, too

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Good time to unload Hellaby Holdings. The auto parts business will be disrupted by autonomous electric vehicles coming to your town

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How did Hugh Green Trustees get all the private shareholder information in order for them to post their opinion piece in support of Bapcor ? Legal ?

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