Healthcare Partners Holdings will consider mounting a full takeover bid for Abano Healthcare provided it can get access to the medical investor's books, and has raised its bid for a controlling stake in the meantime.
Abano's cornerstone shareholders Anya and Peter Hutson and James Reeves, who are mounting their takeover via the Healthcare Partners entity, will entertain making a full takeover if Abano's board will provide access to information to let them do due diligence, something they say the company has been unwilling to do in the past. While it waits for a response, Healthcare has increased its partial takeover offer to $10.16 per share, minus the 16 cents per share dividend Abano recently paid, and if successful would allow due diligence to facilitate credible bids.
"We did not make a 100 per cent offer because the Abano Board has historically been unwilling to provide access to due diligence information, which we currently require to make a 100 per cent offer," Healthcare Partners said in a letter to Abano shareholders. "Whether or not our partial offer is successful, we invite the board of Abano to open a due diligence process for us and all other interested parties.
We can then explore the possibility of making a 100 per cent offer."
Healthcare Partners has attracted 1 per cent of Abano's shares since mounting its offer to build a 50.01 per cent stake in the business. The Hutsons and Reeves already own about 19 per cent, meaning acceptances would probably be scaled if they achieve control. The offer closes on March 3.
They launched the offer saying they want 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 install three new directors.
Abano's board has recommended shareholders reject the offer, and used Healthcare Partner's dividend to cover some of the costs associated with the bid.
Fisher Funds-managed investment firm Kingfish is a shareholder in Abano, and in its December quarterly update said the takeover was "opportunistic" and it would prefer the company "remain listed and pursue its existing strategy unencumbered".
Abano's valuation range by independent adviser Grant Samuel was criticised by Healthcare Partners as using unrealistic assumptions, and was later revised to reflect shares issued as part of management's long-term incentive scheme, putting a fair value of between $9.92 and $11.93, from $9.95 to $11.96.
The company's shares were unchanged at $8.70 today.