Shares in Abano Healthcare climbed to a four-month high after the specialty health clinic investor said it had batted away an unsolicited proposal from an unnamed party alongside director Peter Hutson, and now faces a potential takeover bid.
The stock jumped 11 percent to $6.51 after the Auckland-based company said it received and rejected an unsolicited non-binding indicative offer north of $100 million from a third party seeking to invest and operate in the Australasian dental sector, and now faces a potential takeover bid. That values Abano at $111.3 million.
“There’s a lot of growth in the business and we are supportive of the board and management team,” said Shane Solly, portfolio manager at Mint Asset Management, which holds shares in Abano. The bidders “have got a tough job to offer up a better proposal.”
The proposal was presented in conjunction with Hutson, who owns about 14 percent of Abano, and sought an exclusive and confidential period of due diligence from Abano and unanimous board approval.
Abano turned down the offer saying it didn’t offer anything unique and that the indicative price “while above current market prices” didn’t reflect the company’s value and wasn’t close to a level warranting exclusivity.
“If the third party didn’t see growth, they wouldn’t be interest in our business,” chief financial officer Richard Keys told BusinessDesk.
Keys said another reason behind the board’s decision was because of the scheme of arrangement structure, which would leave Abano covering the cost of the due diligence, and would only require 75 percent shareholder approval, rather than the 90 percent threshold needed in a takeover.
“The board was not willing to cooperate on the basis requested,” he said.
Abano wanted to notify shareholders about the bid it’s looking to raise $15 million via a small placement and share purchase plan, Keys said.