The Business Herald’s markets and banking reporter.

Hostile Aussie takeover bid gets personal

The $323 million Australian takeover tilt for New Zealand's Hellaby Holdings has got personal, with the bidder's boss accusing his Kiwi counterpart of being "conflicted".

But Hellaby chairman Steve Smith has hit back, saying the comments from Melbourne-based automotive operator Bapcor's CEO, Darryl Abotomey, are a "storm in a teacup" and unwarranted.

Speaking to the Business Herald in Auckland yesterday, Abotomey said the NZX-listed company's chief executive and managing director, Alan Clarke, was in a "conflicted position" and should not be involved with addressing the takeover bid.

"The [Hellaby] board has appointed an independent panel of non-executive directors to look after the deal," he said.

"Alan's role should be minimal in this - he should be running the business, not [focused] on the takeover."

Bapcor is offering $3.30 a share offer for full control of Hellaby.

The NZ company has labelled the bid "opportunistic" and said it undervalues the firm, whose divisions range from automotive to footwear - Hannahs and Number One Shoes - and resources services.

Hellaby's board has urged investors not to sell and await an independent report from Grant Samuel.

"If a company's in a takeover bid, the CEO isn't usually the one to be involved in the decision making ... they should be off to the side," Abotomey said.

Clarke joined Hellaby in November after fending off three unsuccessful takeover approaches in his previous role as chief executive of Abano Healthcare.

He was in the midst of a major strategic overhaul of Hellaby when Bapcor's takeover bid arrived last month.

Since Clarke took the helm, the firm's equipment division has been sold and the company also wants to divest the footwear businesses in order to focus on its core resources services and automotive units.

That strategy is aimed at stopping Hellaby from being identified as an investment holding firm, a type of business that has fallen out of favour with market analysts.

Smith said it was "entirely appropriate" for Clarke and other executives to assist the independent directors in preparing a response to the takeover bid.

"Alan is also a director of the company and the directors, collectively, have a duty to act in the best interests of all shareholders," he said.

Abotomey said Hellaby's growth strategy faced many risks and Bapcor's bid offered "certainty" to the Auckland-based firm's roughly 6000 shareholders.

"The investors, the analysts - everyone you look at - have never valued that business, on a volume basis, much above $3 [a share], he said.

"When you look at the cold, hard facts it's hard to support a higher offer price," he said.

Abotomey said the market would still consider Hellaby a holding firm even if it divested its footwear and resources divisions.

Bapcor is eyeing synergies with Hellaby's automotive parts and services division and plans to divest its other businesses if the takeover is successful.

The Australian company expressed an interest in acquiring Hellaby's automotive division earlier this year, but was rebuffed.

Abotomey said Babcor had been surprised by how "dismissive" Hellaby had been of its approach.

"I would have expected them to at least engage," he said. "That was the disappointing bit - there wasn't a real engagement."

Smith said the approach was properly considered but the company decided not to take it any further.

In October Hellaby reported a 30 per cent decline in annual profit, to $19.6m, having cut back earnings guidance earlier this year.

Castle Investments, ACC and Salt Funds Management, which collectively own 30 per cent of the firm, have entered a lock-up agreement to sell their shares to Bapcor.

Hellaby shares recently traded at $3.34, 4c above Bapcor's offer price.

- NZ Herald

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