Craigs recommends Hellaby shareholders sell to Bapcor

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Craigs Investment Partners has written to its partners recommending that shareholders in Hellaby Holdings accept the offer from Bapcor at $3.60 a share.

In a statement published to the NZX this morning, Bapcor said it now owned just over 40 percent of Hellaby.

Shareholders in Hellaby were told the price of $3.60 provides "reasonable value against the current Hellaby share price of $3.45, offers a 29 percent premium to the three-month volume weighted average price prior to the initial bid from Bapcor, and is above our wholesale analyst's $2.88 target price for Hellaby prior to the initial bid."

The note also warns the Hellaby investment case "holds considerable executive risk given the cyclical nature of parts of the business (Contract Resources) and the targeted exit of current loss-making segments (Footwear). This means the path to realising significant shareholder value from Hellaby outside of this offer will take time and involves an element of uncertainty."

It's understood Craigs' clients account for around 14 percent of Hellaby Holdings shareholders.

Bapcor, the ASX-listed autoparts company, launched its bid for Hellaby in September, offering $3.30 a share. It is aiming to achieve 90 percent ownership letting it enforce mop-up provisions to take the company private, but may waive this condition if it controls more than half of the shares on issue and Overseas Investment Office approval, in which case it would seek board representation to push for a shift in Hellaby's direction.

The takeover has seen an escalating war of words between the two parties, with Bapcor taking issue with the independent adviser's report, and Hellaby's directors seeking an additional 18 cent dividend on top of the $3.60 share price, a proposal rejected by Bapcor.

Shares of Hellaby fell 0.3 percent, or 1 cent, to $3.45. They were trading at $3.03 prior to the takeover offer. They've risen 18 percent since the start of the year.