Family moves to increase control of Michael Hill International

Michael Hill. Photo / Brett Phibbs

A spokesperson for the Hill family, which owns a 48 per cent of listed specialist jeweller Michael Hill International, confirmed today that it is looking to take advantage of the depressed share price to acquire a controlling stake in the company.

The family announced earlier that it is in the process of consolidating its ownership into the company, currently held by various trusts, in the company before raising its holdings to 50.1 per cent.

"We've always wanted to buy a bigger stake in the company, and we think the stock is undervalued right now," Emma Hill, a director at the company and spokesperson for the Hill Family, told BusinessDesk. "It is just opportunistic with the right price coming at the right time."

The proposed acquisition does not significantly alter control of the company, according to market commentators.

At the current level, the family controls enough shares to fend off a takeover bid and essentially already has a majority vote once no-shows are factored in.

"They obviously just want to get control back of what you would consider a very well managed retailer," said Grant Williamson, a director at Hamilton Hindin Greene. "Now it is largely up to institutional shareholders to decide whether or not to approve it, but I don't think anyone will stand in their way."

Michael Hill's board said that the arrangement will require certain exemptions from Takeover Code, which have already been requested. Under New Zealand takeover rules, the Hill family is not permitted to increase its shareholding in the company without shareholder approval, and had proposed putting the matter up to a vote at the company's AGM on November 5.

If approved, the Hill family said it would look to increase its voting control in the company through a share buy-back scheme.

Last week the company posted solid 2010 full year results, with underlying net profit up 60 per cent to $26. 5 million compared to the previous period.

The results reflected both sales and profit growth in its New Zealand and Australian operations which more than offset losses in Canada and the US, where it was forced to close 17 US stores earlier this year.