Bapcor Ltd (ASX: BAP) has made its deal for Hellaby Holdings Ltd unconditional and is again urging shareholders to consider its offer.
A messy ordeal
In September 2016, Bapcor, the owner of popular automotive parts groups such as Burson and Autobarn announced an offer for New Zealand's Hellaby Holdings equivalent to $NZ 3.30 per share. As part of the deal it was expected Bapcor would divest Hellaby's non-core assets.
However, in October the board of Hellaby's instructed its shareholders to reject Bapcor's offer saying it undervalued the company. An independent expert valued Hellaby's shares between $NZ 3.60 and $NZ 4.12.
In November, Bapcor released a statement saying it was, "underwhelmed by Hellaby's failure to address the substance of its letter to Hellaby shareholders." It stated that the independent expert report did not consider some important factors in its valuation. Nonetheless, a few days later Bapcor upped its offer price to $NZ 3.60 per share. Next it sought to make some media releases, titled:
"Hellaby break up option shows lack of confidence"
"Disappointing trading guidance creates yet more uncertainty for Hellaby shareholders"
Earlier this week Bapcor then waived its 90% acceptance condition announcing that it had already received 50% of voting rights in Hellaby's.
Finally, today it extended the offer to the 7th of February, 2017 and declared the deal unconditional, which means the company will formally proceed with the takeover.
With its current acceptances of 52.5% of all shares, Bapcor has the ability to appoint directors to the Hellaby's board. That means it will be able to affect plans for the company's future.
"Bapcor considers that the Hellaby Board should now be recommending that it is in the best interests of all shareholders to accept the Bapcor Offer," Bapcor said in its statement.
From the outside, this appears to have been a messy takeover.
Foolish Takeaway
Previously known as Burson, Bapcor has been aggressively buying up businesses in the automotive parts industry. Its share price since listing in 2014 has risen over 180% and is mostly reflective of the company's ongoing acquisition agenda, in my opinion.
Looking ahead, I think it is vital investors do not overpay for Bapcor's shares and recent growth since its organic potential may not justify its valuation. Not only that, integrating multiple new businesses in a very short period of time can create headaches for even the best management teams. For these reasons I think it would be wise to adopt a 'wait and see' approach to see how it fairs in coming months.
