FMA drops claim against Abano bidders Archer Capital and Healthcare Industry

The Financial Markets Authority has dropped civil proceedings against private equity firm Archer Capital and Abano Healthcare [NZX: ABA] shareholder Peter Hutson over the way they pursued a takeover of Abano in 2013.

The market watchdog filed papers against Archer and Hutson's Healthcare Industry vehicle in late 2014, claiming they should have notified the market of their plans to pursue a takeover of Abano earlier than they did. The FMA today said it will discontinue those proceedings and that the defendants accepted an investigation was justified, with each party agreeing to bear their own costs.

"The FMA has concerns about market practice in this area and considers that the claim was justified but is no longer satisfied that it is in the public interest to progress the matter to trial," it said in a statement. "The FMA will continue to investigate and take action in cases where it considers market conduct to be unsatisfactory, including cases which show signs of an approach that the duty of disclosure is only triggered by a formal, written agreement rather than an informal 'arrangement' or 'understanding' as provided for by the law."

In 2013, Mr Hutson, who was a director of Abano at the time, and fellow shareholder James Reeves teamed up with Archer to make an informal bid for Abano at $6.97 a share, which would have seen the Australian private equity firm take the healthcare investor's dental businesses and hand the audiology units to Hutson for a nominal sum.

The offer was turned down by the Abano board as being too low. Archer was refused due diligence access because it could become a direct competitor to Abano. Messrs Hutson and Reeves later tried to oust chairman Trevor Janes, calling a special meeting of shareholders, though the resolution was voted down.

The FMA said its expectation is that substantial shareholding disclosures aren't "stage-managed and delayed to suit the parties' commercial needs" and that it "takes the view that an understanding or arrangement may arise when the core commercial principle has been agreed, or an understanding arrived at" even if it hasn't been set down in writing.

"Having clarified its position, in future the FMA may look to take proceedings where it believes the parties' commercial conduct can only rationally be explained by the existence of an arrangement or understanding," it said.

(BusinessDesk)