KEY POINTS:
The unsuccessful battle for control of Abano Healthcare provided an inordinate amount of copy given the size of the company.
The fact is the affair had some spicy ingredients - a relatively small but fast-growing private healthcare company that kept on meeting its ambitious forecasts, targeted for takeover
firstly by Christchurch's Mark Stewart, a shrewd and at times bruising player, then also by sizeable Australian private equity outfit Crescent Capital.
An interesting postscript to the story has been Abano's bid to recover from Crescent the cash it spent dealing with its offer. Having not received the money, Abano is withholding payment of dividends on the shares Crescent still owns.
Managing director Alan Clarke says the matter is still subject to litigation.
Clarke and his team have achieved much, in a relatively short time, transforming the company from an aged care provider to a clinical services outfit which has rolled out a network of audiology clinics in New Zealand, has made initial moves into Australia and is eyeing Asia.
During the takeover battle, management made some more ambitious projections in a successful attempt to keep investors onside.
It is forecasting a record 2008 financial year with revenues expected of approximately $125 million against $89.46 million last year and a net profit of $7.9 million, against $5.33 million.
Clarke reckons the business is "relatively immune" to the business cycle and has not seen fit to revisit these numbers. The company reports its May-year results in July. Abano shares surged 15c yesterday to close at $4.85.
RETURN OF PRIVATE EQUITY
Things have been pretty quiet on the private equity front for a while now. That's unsurprising really as the model largely relies on cheap money.
Last year, as soon as it became clear the sub-prime crisis was driving the cost of credit higher, it was a safe to assume that the private equity boom, like at least one or two others, was over.
It's got to the stage now, as Infratil boss Lloyd Morrison observed this week, where big, celebrated United States players like Blackstone and the original "Barbarians at the Gate", Kravis Kohlberg Roberts, are now moving into infrastructure investment.
However, Stock Takes understands that one of the bigger players in this part of the world, Pacific Equity Partners, just completed raising A$4 billion in new funds and is still kicking tyres here and in Australia.
Word is the likes of PEP and other sizeable players have welcomed the shakeout of smaller rivals resulting from the credit crunch.
A DOER-UPPER
A couple of weeks ago, Stock Takes speculated that Christchurch businessman George Gould's interest in tarnished financial advisory firm Vestar might have something to do with trailing commissions the company is still collecting from those finance companies it put client money into that remain going concerns.
However, Gould Holdings' Jeff Staniland got in touch to say that is not the case. What Gould is interested in is the company's assets.
"There's a national presence, they've got staff, they've got a lot of history, clients and advisers. The bones of it are there," he says.
Gould Holdings is negotiating a sale and purchase agreement for the business with owners Octaviar (formerly MFS). Safe to say the price will be considerably less than the A$86 million MFS valued it at not so long ago.
Given its egregious investment record and the fact that its specious offer to make sure investors "do not suffer any capital loss" in relation to their Capital + Merchant investments is now looking like a sick joke, Staniland says, yes, the company's name is essentially mud.
"It's obviously very beaten up. You can imagine no one's feeling very good there, a lot of people left. Definitely it's a doer-upper."
If Gould does buy it, rebranding is likely. Still a lick of paint isn't going to change the fact that, as Staniland says, the company's founder, and member of the selection committee that picked so many dogs for investors, Kelvin Sym, will remain part of the organisation.
FIRST CONTACT
Contact shareholders trying to make sense of what's going on with the takeover of Origin shouldn't get too carried away with reports that BG already has a buyer for Contact lined up.
There have even been some suggestions that China Light & Power is that preferred buyer - although that name appears to be coming from industry analysts rather than the investment bankers involved.
It is no secret that BG doesn't want Contact and is looking at options for a trade sale of Origin's 51 per cent stake.
There's also little doubt they already have a list of all the likely parties and will be making tentative approaches. And China Light & Power will be on that list.
But BG won't push that sale process too aggressively until they get a steer from Origin on whether this takeover is friendly or hostile.
Indications are that there is no rival bidder for Origin in the pipeline and that would tend to stack the odds in favour of the board working with BG.
But the BG camp is nevertheless being very careful not to get ahead of themselves on any sale process and risk looking presumptuous.
Meanwhile, the BG camp still has serious concerns about the chances of the Overseas Investment Office allowing the sale of the Contact stake to a foreign buyer.
While a change of government could solve that, it is not a solution that aids an early sale process.
So the easiest and likely preferred route for BG is to find several buyers to take big chunks of a 51 per cent stake. In other words, break it into stakes of 19.9 per cent or less.
That way the need for the buyer to make a full offer or face the wrath of the OIO is avoided.
If all else fails, a market float is still an option but that is unlikely to do great things for the share price given the market conditions.
Contact shares closed at $8.97 yesterday.
ON TARGET
Mainfreight reports its full-year result in a week's time, and while analysts say Fletcher Building's US acquisition Formica is looking like a problem because of the softening in the world's largest economy, First NZ Capital's Andrew Mortimer is more upbeat about Target, the US logistics firm Mainfreight acquired for $77 million in September.
Given the firm's performance during its first two months of Mainfreight ownership, "there may be some small upside earnings risk".
Commenting on Mainfreight's third quarter results in February, managing director Don Braid said he expected Target would benefit from the introduction of "Mainfreight's strategies and capabilities".
"While speculation surrounds a US domestic recession, we expect Target to continue to grow market share and take advantage of better linehaul opportunities to improve margins in both our domestic and international operations."
Braid said the drop in the US dollar had seen significant export growth from the US "which will assist export volumes for our American operations".
Apart from Mainfreight's New Zealand business, which in any case should benefit from market share gains, Mortimer expects "excellent top line revenue growth" from its various operations.
He is picking earnings before interest, tax, depreciation and amortisation of $75.2 million which is towards the top end of consensus estimates.
Shares in Mainfreight, which has been one of the best performers in the past few months, closed at $6.85.
WHAT'S ON THE MENU AT RESTAURANT BRANDS?
Pacific Equity Partners was understood to have had a look at fast food company Restaurant Brands last year when it was on the market, but didn't sell.
The company has been the subject of some unusual trading patterns this month, with meteoric volume spikes and overall trade at levels far higher than in April.
The share price has lately reached 85c, slightly up on the 79-80c mark it has been hovering at for much of the past six months. Shares closed yesterday at 85c.
The market conjecture is that material changes are afoot to the business of selling fried chicken, pizza and coffee.
One rumour has it that the company is looking to sell off one of the star performers in its trinity, Starbucks, while another points to a divestment of its ailing pizza business. But the company denies outright any such plans.
And chief executive Russel Creedy is just as mystified as to what has caused the spike in volumes, with no one big institution taking up or selling off its stake in a substantial way.
The sale of Starbucks is a "good rumour", says Creedy, but the Pizza Hut scenario is one that he regularly hears of. He says there are no proposals - nor offers - to sell any part of the business at this time.
