FMA files civil proceedings relating to failed Abano takeover

The Financial Markets Authority has pounced on Peter Hutson’s failed takeover attempt of Abano Healthcare [NZX: ABA] and filed civil proceedings against parties involved in last year’s hostile bid.

The FMA proceedings have been filed and served against Australian private equity firm Archer Capital and Healthcare Industry Ltd (HIL), an investment vehicle for Mr Hutson’s interests.

Mr Hutson is a former director of Abano who led a failed attempt to oust chairman Trevor Janes following the takeover proposal being rebuffed.

The FMA alleges Archer and HIL breached substantial shareholder disclosure obligations contained in the Securities Markets Act at the time of their approach to the Abano board to acquire the company.

Archer and HIL filed SSH notices on September 16, 2013 informing their relationship to a 19.9% shareholding in Abano.

The FMA alleges that an agreement, arrangement or understanding to act in concert in relation to Abano shares existed between the parties prior to September 16, and therefore notices should have been filed earlier. 

Abano notified the market on August 7 that it had rejected an unsolicited, prospective “non-binding indicative and confidential” proposal presented in conjunction with Mr Hutson. NBR has previously reported that approach was made in mid July.

The FMA says Archer and HIL’s SSH notice should have been filed earlier and it is seeking declarations of contravention and pecuniary penalties, with the Securities Markets Act allowing for a maximum penalty of $1 million.

“Timely and accurate disclosure is central to the promotion of a well–informed and transparent market.  A fully informed market leads to a fair and transparent market," FMA director of enforcement and investigations Belinda Moffat says.

"Immediate disclosure is particularly important in the case of understandings or arrangements among shareholders that may lead to a takeover proposal or a stand in the market."

UPDATE: Archer Capital has released a press statement saying it is dissapointed by the FMA's decision to take action against it.

"Archer Capital is confident that the notification was filed at the appropriate time and that it has complied with its legal and regulatory obligations and acted in accordance with normal market practices.

"The proceedings will be defended vigorously."

Archer’s takeover proposal was initially for a cash consideration of $7.30-$7.50 a share and then 6.97 to $7.14-a-share, and later revised up to $7.80-a-share.

The deal would have seen Archer acquire the healthcare investor's dental businesses and hand the audiology units to Hutson for a nominal sum.

Abano's board rejected the offer for a number of reasons including because it believed it was too low for 100% control.

It denied due diligence access because it viewed Archer as a potential direct competitor.

Mr Hutson was forced to resign from the Abano board due to perceived conflicts of interests.

Archer withdrew its offer and then the issue turned into an ugly battle between Mr Hutson and fellow shareholder James Reeves and Mr Janes.

Abano shares last traded at $7-a-share.