Archer Capital withdraws Abano bid

Last updated 15:22 28/11/2013

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A private equity consortium has walked away from takeover target Abano Healthcare after several months of acrimony, citing a profit downgrade disclosed at Tuesday's annual meeting.

In a statement issued this afternoon, the consortium of Archer Capital, former Abano director Peter Hutson and investor James Reeves said it had withdrawn a proposal delivered to Abano's board on November 19 of $7.80 per share.

"It is disappointing to learn of a second downgrade in only eight months, and to have this information produced and downplayed without warning at the AGM," Reeves said.

"There are also serious concerns about the company's governance which were reinforced by the timing and poor quality of the information presented to shareholders."

A potential takeover bid from Archer and interests associated with Reeves and Hutson was revealed in August and strongly opposed by the Abano board.

A valuation from Grant Samuel commissioned by Abano and disclosed on Tuesday said the company, which owns dental practices in New Zealand and Australia alongside a range of healthcare services, was worth $8.30 to $10.05 a share.

Abano chairman Trevor Janes told the meeting: "We believe the report speaks for itself, and that it supports the board's judgment in dismissing the Archer/Hutson/Reeves approach as opportunistic and undervaluing the Group."

Profit guidance given at the meeting indicated half-year revenue would be $105 million to $107m, slightly down on the previous year's $108m, while operating profit would be $13m-$14m, down from $15m.

In today's statement, Hutson criticised the board's handling of the revised takeover proposal at $7.80 a share, up from an earlier indication of $7.14.

"We were very surprised this had not been disclosed to shareholders until a full week later at the AGM, and then, only in passing in the chair's address," he said.

"We made a firm proposal and this was clearly understood by the company who then called the same day seeking clarification on several points. To suggest otherwise is incorrect."

The bid consortium said they were disbanding pre-bid agreements covering a 20 per cent stake in Abano held by Hutson and Reeves interests.

The pair said they "will now increase efforts to bring about the change needed to deliver better value for all shareholders" and noted that at the AGM Janes "was returned to office by a small margin - 56 per cent votes for and 44 per cent votes against."

Hutson and Reeves said they looked forward to other takeover offers being disclosed, following remarks by Janes that the Archer proposal had triggered other interest.

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At the AGM, Janes said the board was assessing other options.

"While we cannot disclose any further information at this stage, as we are currently evaluating proposals, we can say that some options have indicative valuation ranges that are significantly higher in value than the Archer/Hutson/Reeves proposal."

Abano shares were up 20 cents in afternoon trading to $7.40.

- Fairfax Media

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