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.
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