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Abano Healthcare yesterday marshalled its defences against Masthead Equities' bid for control, by forecasting a big lift in revenue and earnings, indicating competing offers were likely, and urging shareholders not to sell until they had seen an independent valuation.
The company said it expected May 2008 year revenues of up to $125 million, earnings of up to $23 million and a net profit of up to $7.5 million.
Its shares, which have been rising in recent months on signs its strategy of moving out of aged care into the audiology and dental sectors is panning out, surged a further 25c to $4.25.
Abano chairwoman Alison Paterson said the company's various businesses had performed well and its "high-quality investment decisions" were now bearing fruit. It was now well placed to benefit from increasing demand for private health care.
Abano's share price is now well north of the $3.85 which Masthead, the Christchurch-based Stewart family's investment vehicle, has said it will offer for 51 per cent of the company.
But Paterson said that since Masthead tipped its hand last month, "The board has received approaches from other parties expressing interest".
"In circumstances where the board considers it to be in the interests of the company and its shareholders, the board has and will allow suitable parties to undertake due diligence for the purposes of preparing alternative propositions."
Paterson said the board "has not determined that it is necessarily in the best interests of shareholders that a change of control should occur", but it was up to shareholders themselves to decide.
"We can say our shares have increased in value from $1.55 a year ago to $4 now. If you think the current strategy is solid and gives your investment the best opportunity for growth in value and dividend return and decide that this company is not for sale, then that is for you."
If shareholders were keen on the Masthead offer, "Remember, you do need to get the premium for a majority in this particular sale".
Paterson said it was too early to say anything to shareholders except "don't sell".
An independent valuation was now being prepared and must be produced within Masthead formally tabling its offer.
With 19.9 per cent, Masthead is Abano's largest shareholder, but the next two largest - the Rotorua Energy Charitable Trust, with 10.5 per cent, and Salvus Strategic Investments, with just under 6 per cent, have both indicated they regard Masthead's offer as light.
That view was supported by a research note from Forsyth Barr analyst John Cairns yesterday.
On the basis of Abano's guidance Cairns lifted his valuation on the company's shares to $4.64.
"This valuation does not incorporate a premium for control, which could be significant in the event of multiple bidders," he said.
