Bapcor raises offer and stake in Hellaby

Auto  parts company Bapcor has raised its hostile takeover play for Hellaby Holdings, from $322.5million to $351.8million, and boosted its stake 10% to 40%.

The Australian company's stake so far has been built entirely on making offers to institutional investors, who probably having held their shares long-term may see more value in selling than smaller retail shareholders.

The offer rose about 9% from $3.30 yesterday to $3.60 per share.

While targeting a 100% takeover, Bapcor weeks ago said it it would waive that condition, if the final outcome was gaining a 50.1% controlling stake.

Bapcor wants access to Hellaby's mainstay automotive division and its 120 locations, raising questions over Hellaby's non-core asset, the 117 Hannahs and Number One Shoes outlets, which are being restructured.

When Bapcor launched its hostile $3.30 bid in late October, it had already secured ``locked-in agreements'' with three shareholders collectively representing a 29.9% stake, but the $3.30 price garnered less than 1% acceptances from other shareholders.

However, in announcing its $3.60 per share offer yesterday, Bapcor also announced other shareholders - the Accident Compensation Corporation, Pengana Capital and Aspiring Asset Management - had agreed to sell at $3.60. Their three combined 10% stakes raised Bapcor's grip on Hellaby to 40%.

The first three 30% shareholders have agreed to the $3.60 offer, Bapcor chief executive Darryl Abotomey said in a statement yesterday.

He said the decision to increase the offer price was made after consulting major shareholders. He noted Bapcor would not increase its offer price further.

Craigs Investment Partners broker Peter McIntyre said Bapcor had probably invested too much time in the takeover to walk away without upping the offer.

``It's still going to be tightly run. It is more favourable for smaller shareholders and likely enough to get over 50.1%, but getting to the full 100% might be a struggle,'' he said.

Apart from a war of words via the sharemarket between Bapcor and Hellaby's board over the valuation of some assets, the pair also disagreed on an independent valuation.

Hellaby's independent directors responded to the revised $3.60 offer, saying they did not support it, without a dividend payment. Hellaby's board had determined a dividend of 18c per share, to reflect the large capital gain made on the sale of the Equipment Group during the year.

That had been communicated to Bapcor last week, Hellaby chairman Steve Smith said yesterday.

``We clearly stated that that price would need to include an appropriate dividend payment,'' Mr Smith said.

The valuation by Grant Samuel of $3.60 to $4.12 meant yesterday's final offer by Bapcor sits at the bottom of that range, but represents a 29% premium compared with the share's average price three months before the offer.

Mr Abotomey said: ``Our 100% cash offer provides certainty to shareholders in contrast to the risks around Hellaby's unproven business strategy that is, in our view, increasingly being recognised as over-ambitious.''

Bapcor also extended the offer closing date from December 20 to January 18.

The final date it can declare the offer unconditional is extended to February 1.

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