Diversified investment house Washington H. Soul Pattinson has said its discounted take-over bid for Hunter Hall is intended to stabilise the company’s share price rather than be a ‘hostile grab’ for control.
Speaking to InvestorDaily, Washington H. Soul Pattinson (WHSP) chief executive Todd Barlow said the company’s offer to buy shares in Hunter Hall Limited (HHL) at a 59 per cent discount to its trading value following the resignation of founder and chief investment officer Peter Hall “created less uncertainty” for markets and existing shareholders.
“It’s a bit of an unusual transaction, and I’m not aware of many transactions where you have a take-over offer price that is below the share price at the prevailing time, but I suppose it was driven by the sequence of events that occurred around Christmas time,” he said.
“We’ve seen the share price pop back up to the region of where it was trading prior to the uncertainty created by Peter’s resignation, and so in some respects, our presence has created that value uplift of the market price, which makes our takeover offer look more undervalued, but it’s sort of the process we’ve had to go through.”
Mr Barlow said WHSP had no intention of altering the business model at Hunter Hall, commenting that the only changes it would make would be to improve cost efficiencies in the “unlikely scenario” WHSP acquired more than 90 per cent of HHL and delisted it from the ASX.
“If you get through 90 per cent, then you can proceed to a compulsory acquisition and then it would become a wholly owned subsidiary of Soul Pattinson, in which case there will be a number of functions that relate to it being a listed entity that won’t be required, and that might include the board and certain administrative functions,” he said.
“We don’t think it’s going to be a wholly owned subsidiary, but if it was it would just be normal that there would be some costs associated with being a listed entity that would be unnecessary.”
Mr Barlow said WHSP found HHL attractive due to its “index agnostic, absolute-return style” investment strategy, and that the transaction was being conducted quickly to protect HHL’s share price from uncertainty caused by Mr Hall’s departure.
“We don’t want to appear as a ‘corporate raider’ who’s come in and is making a hostile grab for the company, what we’ve actually done is the opposite. We’ve tried to come in and stabilise the business as much as possible and preserve as much value as we can,” he said.