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Crescent Capital officially entered the fight for control of Abano Healthcare yesterday, snapping up the Rotorua Energy Charitable Trust's 10.9 per cent stake and topping Masthead Capital's $5 a share partial takeover bid with a $5.20 offer for all of Abano.
The Sydney-based private equity firm which was tipped as a potential bidder for the clinical services company by the Business Herald several weeks ago, said it acquired the RECT's stake off-market at $5.15 a share.
Crescent executive director Michael Alscher said the trust's decision to sell should be noted by other shareholders.
"The trust was a large and informed investor that the chair of Abano had cited as being supportive of Abano's growth prospects and not a seller into the Masthead offer. In selling to us, we believe the trust preferred certainty and recognised that our price provides a sufficient premium."
Crescent's offer, conditional on gaining 90 per cent acceptances, at $5.20 a share is still well below the mid point of a valuation range prepared by independent adviser Ferrier Hodgson after Masthead made its initial offer of $3.85 two months ago.
However, Alscher said the projections in the report assumed levels of very strong growth over a six year period, requiring "near-perfect execution of the business plan and for market and competition factors to remain strongly in Abano's favour".
"By contrast, the Crescent offer will allow shareholders to substantially capture the full value of Abano's projections immediately with no risk.
"The company's never traded as high as $5.20. Our view is that if our offer and takeover speculation wasn't there, the company would trade right back down below $5."
Abano's board said it had indicated to Crescent that it would not recommend the offer, but "as the offer may be at a level that Abano shareholders may find attractive it would not consider the offer to be hostile or unsolicited as those terms are commonly used, and would be content for the offer to be presented to shareholders".
It would immediately appoint an independent expert and prepare an updated Target Company Statement which would include comments on the offer's merits. In the meantime, it advised shareholders not to sell.
While Crescent's offer effectively sinks Masthead's bid, the Christchurch-based investment firm remains in the box seat with its 19.9 per cent stake, for which it paid an average of $1.55 a share.
"Clearly in order to be successful we need their support and we'll be endeavouring to talk to them as soon as we can," said Alscher.
Crescent intends to keep Abano's present management if successful and hoped to find ways to "add further value to the business".
Crescent owns Australian business Lifehealthcare which at present competes with Abano in some markets.
Abano shares closed 17c higher at $5.05 yesterday.
HEALTHIER PRICE
* Australian private equity firm Crescent Capital Partners is offering $5.20 a share for Abano Healthcare.
* It has snagged the biggest single shareholding, Rotorua Energy Charitable Trust's 10.9 per cent for $5.15 a share in an off-market transaction.
* While Masthead's $5.00 a share offer is now trumped, with its 19.9 per cent stake it still holds the keys to control of Abano.
