KEY POINTS:
A slanging match between private equity group Crescent Capital Partners and the board of takeover target Abano has begun as both parties try to sway shareholders' actions in the bid for the listed healthcare company.
Yesterday Crescent questioned the credibility of an independent appraisal on the value of
Abano after its board recommended shareholders turn down a $5.20 a share offer.
The board released its target company statement late on Thursday telling shareholders to reject the takeover offer after a report by KordaMentha which put the valuation range of the company's shares between $5.15 and $5.90.
Crescent executive director Michael Alscher said it was surprised by the board's recommendation and disappointed at the approach taken by KordaMentha.
"We are surprised and dismayed that after encouragement from the board to increase our offer from what we originally intended to the $5.20 level ... the board has taken the stance of advising shareholders to reject our offer.
"We are also completely baffled that the valuation range of the independent adviser has increased since the last report.
"With no justification, Abano provided a revised set of projections that in our view are even more aggressive than those provided to the independent advisers in October and it would appear that the independent advisers have simply taken these projections and valued them without providing any independent analyses of the key assumptions."
Alscher said it was not credible that performance over a two-month period - during November and December - could lead to a more aggressive forecast for the next six years.
"The credibility of Abano's aggressive projections is a major issue for shareholders to consider." He said the report appeared to rely on Abano's optimistic market projections and failed to take into account growing competition in the market and an expected decline in ACC funding which makes up half of Abano's audiology business.
"Economic reporting seems to suggest a gloomier outlook for markets and the New Zealand economy going forward, leading to further uncertainty as to whether Abano will be able to meet its aggressive projections."
But Abano chief financial officer Richard Keys rubbished the claims and said Crescent was acting in its own interests by using scare tactics to try to encourage shareholders to sell up.
"We are concerned about the statement made by Crescent, it is designed to shake shareholders' confidence - they have an interest in shaking shareholders' confidence and ensuring shareholders sell to them."
Abano board chairwoman Alison Paterson said Crescent was making assumptions without knowing the full picture as due to its owning a business in direct competition with Abano the board had not allowed it to see its Australian figures.
"KordaMentha have had access to all our businesses. There is no way they are going to compromise their independence."
Paterson said the board had full confidence in the forecast projections made by Abano's management and there was no merit in warnings about New Zealand's economic status and its impact on the business.
"We are a service organisation for people who require healthcare - that is not a discretionary spending area. I don't think their argument is very valid."
Keys said Abano remained concerned about what Crescent would do with the Australian part of the business.
"In the press they have said they will discontinue Australian expansion - we can understand why - they own a business which competes with us in Australia. Our concern is if they end up as a 51 per cent shareholder the remaining shareholders in Abano wouldn't benefit from the strategy we have put in place."
Crescent has said it will only go forward with a takeover if it can get the minimum of 90 per cent in acceptances and will block anyone who also tries to undertake a full offer. It now has a 10.9 per cent stake in Abano, purchased in December.
But Paterson said Crescent was not the only interested party and it had more than one confidentiality agreement signed with other parties, which could see another partial offer presented.
The other parties do not include partial takeover bidder Masthead Portfolios, owned by interests associated with the Stewart family, which failed to reach its 51 per cent target after raising its offer from $3.85 to $5 a share in early November.
Masthead is the largest shareholder in Abano and owns just under 21 per cent. But Paterson said it had not heard anything from Masthead recently. Crescent's offer period closes at the end of February.
HOTLY CONTESTED
* October 2006 Masthead acquires 19.87 per cent in Abano for $1.55 a share.
* September 2007 Masthead announces its partial takeover offer to increase its share to 51 per cent for $3.85 a share.
* October 2007 Abano's board recommends shareholders turn down the offer after a report from independent appraisers which put its share value range at $5 to $5.80.
* November 2007 Masthead increases its offer price from $3.85 to $5 a share. The board continues to recommend shareholders don't sell.
* December 5, 2007 Crescent announces its offer for a full takeover bid of $5.20 a share after buying 10.9 per cent of Abano from RECT for $5.15 a share.
* December 11, 2007 Masthead's offer period expires failing to reach the required level.
* January 3, 2008 Abano's board releases target offer statement recommending shareholders don't sell after receiving revaluation which puts the share value range between $5.15 and $5.90.
