Swashbuckling corporate raiders vs minority shareholders
By Ashley Gardyne, Portfolio Manager
07 December, 2016
The New Zealand share market, once characterised by swashbuckling corporate raiders, lax financial regulation and limited protection for minority shareholders, has thankfully come a long way. Introducing the Takeovers Code in 2001 was a significant step in the right direction and a real gain for minority shareholders.
However, a loophole still exists for corporate raiders to get control of listed companies on the cheap via partial offers. Partial takeover offers are often controversial and can allow a bidder to gain control (50.1%) of a listed company without allowing shareholders to cash out all of their shares at the offer price. Minority shareholders can be left with a residual shareholding in a company with lower liquidity that is controlled by the corporate raider: not a great place to be.
Abano Healthcare has recently received a partial takeover offer from Healthcare Partners at $10 per share, which would shift their shareholding from 19.02% to 50.01% and give them control of the business. This is the fourth takeover offer associated with Abano Healthcare since 2007.
Why so many takeover offers? We think it's because the bidders are sophisticated investors who see the same significant value that we see.
Abano is a rare New Zealand business that has both a strong track record of creating value for shareholders and a long growth runway ahead. It's a well-run business rolling out its proven corporate dental model across the Tasman (Lumino in New Zealand/ Maven in Australia). The sale of its audiology business for $32m in June provided it with further firepower to pursue its goal of attaining a 10% share of the $11 billion trans-Tasman dental market.
Healthcare Partners have already indicated they intend to change Abano's strategy and limit its growth; an undesirable outcome. We would prefer Abano to remain listed and pursue their existing strategy unencumbered. Watch this space.