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Australian investment company Crescent Capital Partners today agreed to make up the difference in the price it pays to shareholders in takeover target Abano Healthcare Group, if it increased its bid price.
Crescent scooped up 8.7 per cent of the company from institutions on Friday, at prices below its offer of $5.20 a share, increasing its stake in Abano to 19.9 per cent.
Crescent is seeking 100 per cent of Abano, with shareholders having until February 29 to decide.
On Saturday, Abano chairman Alison Paterson reiterated the board's advice to shareholders not to sell, saying Crescent had not mentioned an escalation clause for sellers to participate in any increase in Crescent's offer.
Crescent director Michael Alscher today told Abano shareholders that if they accepted Crescent's on-market offer and if Crescent lifted the takeover offer above $5.20 , they would receive the difference between that higher price and $5.20.
"This escalation agreement is not intended to indicate any intention by Crescent to vary the price offered under the takeover offer, but to ensure you are not disadvantaged if Crescent were to increase the price offered under its takeover offer," he said in a letter to shareholders.
"At present, Crescent does not intend to increase the offer price under its takeover offer but it reserves the right to do so."
On Friday, Brook Asset Management and BT Funds Management sold their Abano stakes, while Salvus Asset Management and ACC sold a substantial portion of their holdings.
Ms Paterson said some institutions sold because the size of the investment in their portfolios had increased when Abano's share price rose, breaching prudential investing rules.
"Shareholders such as Salvus and ACC have advised the company that they remain supportive shareholders and indeed they did not sell the majority of their shares as they see significant upside in the company," she said.
Abano had continued to experience improved margins across all existing businesses, and with new developments there was considerable upside in the current share price, Ms Paterson said.
Abano directors have recommended shareholders do not accept the offer because it did not give enough value to the company, as it was near the bottom of an independent valuation range of $5.15 to $5.90.
Crescent's full takeover bid follows an unsuccessful partial bid of $5 a share from Masthead Portfolios.
Abano shares were trading today at $5.10, down 5c.
- NZPA
