The subsidiary, named WHSP Hunter Hall, has offered to buy all ordinary shares in the ethical fund manager at $1 each, the same price at which parent company Washington H. Soul Pattinson (WHSP) bought its initial 19.9 per cent stake in the company from resigning chief executive Peter Hall.
According to a document issued to ASIC and the ASX from commercial law firm DLA Piper, on behalf of WHSP, the subsidiary was established on 3 January 2017 for the purposes of the Hunter Hall takeover.
The price offered for the shares is a 59 per cent discount to their closing price on 10 January 2017, the day before the offer was made, and a 69 per cent discount to the price Hunter Hall Limited (HHL) shares were trading at the day before the announcement of Peter Hall’s resignation.
WHSP Hunter Hall listed a number of reasons why existing shareholders should consider the offer, including that it is a simple cash offer, it will provide shareholders with full liquidity as well as offer them ‘certain value’ for their shares, and that shareholders “may be exposed to a number of risks” if they chose not to accept the offer.
“If [shareholders] do not accept the offer and the WHSP Group acquires control of HHL but does not achieve compulsory acquisition, [they] will be a minority shareholder in HHL with limited influence in running the business,” WHSP Hunter Hall said.
“Decisions made in respect of the business of HHL under the control of the WHSP Group may, therefore, have an impact on those HHL shareholders who do not accept the offer. The WHSP Group’s majority holding in HHL shares and its control over the company may affect the liquidity of minority shareholders’ HHL shares.”
WHSP describes itself as an "investment house with investments in a diverse portfolio of assets across a range of industries" such as building materials, telecommunications, retail, agriculture, property equity, and natural resources – including a 59.7 per cent stake in coal mining company New Hope Group.
Last week, HHL chair Kevin Eley told InvestorDaily that the company would be consulting “independent experts” regarding the takeover offer, noting that the individual shares in the company are “worth a lot more than a dollar”.
WHSP Hunter Hall said that if it succeeds in acquiring over 90 per cent of shares in HHL it would proceed with a compulsory acquisition of the remaining shares and remove HHL’s listing on the ASX, as well as replace the HHL board with WHSP nominees, though it may “in its discretion seek to retain one or more of the existing HHL directors”.
WHSP Hunter Hall said that HHL’s current employees are an “integral part of HHL’s operations”, but said it would “seek to integrate certain functions of HHL with those of WHSP’s investee committee” if successful in acquiring more than 90 per cent of the business.
“In these circumstances, some positions may become redundant,” the company said.
“It is also possible that certain positions may become redundant if HHL is removed from the official list of the ASX or due to the cessation of duplicated functions.”
Earlier this week, HHL announced that deputy chief executive Paula Ferrao and deputy chief investment officer James McDonald would take over from Mr Hall as the company's interim chief executive and interim chief investment officer respectively.
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