The independent directors of Hellaby Holdings now support a takeover bid by ASX-listed auto parts firm Bapcor after the offer was declared unconditional.

Bapcor wants Hellaby for its automotive business and plans to sell its equipment, resources and footwear businesses. The deal will give it a foothold in the New Zealand market, where car sales have been hitting record levels over the last three years due to a rapid increase in population and fast growing economy. On Friday Bapcor declared the $3.60-per-share offer unconditional, after it secured more than 50 per cent of the shares, and extended the closing date to February 7. As of this morning, it owned 56 per cent of Hellaby.

Hellaby's independent directors had previously opposed the takeover, arguing the offer undervalued the business and should come with a further 18 cent per share dividend. Today, Hellaby chairman Steve Smith said that while the directors still think the offer potentially undervalues the company, Bapcor gaining a majority shareholding "adds significant risk to any future delivery of additional value to current shareholders" so the board has changed its recommendation.

"Shareholders who retain their Hellaby shares will be in a minority position with little influence, in a company with a majority shareholder, which has a different strategy to that set by Hellaby's current board," the directors said. "Bapcor has also advised that it plans to appoint a majority of its nominees to the Hellaby board. The new Hellaby board will then be able to re-set strategy, including the potential divestment of existing businesses and change Hellaby's capital management, including dividend and borrowing policies."

Advertisement

The directors said shareholders might not have another opportunity to sell their shares for the same or more after the offer closes, as there will likely be a reduction in liquidity and the share price after the offer closes.

"The independent directors advise that Hellaby shareholders should act promptly to ensure acceptances are received before the end of the offer period

Hellaby shares last traded at $3.57 and have gained 23 per cent in the past 12 months.