Monday, December 20, 2010

Michael Hill International: "Takeover" Undervalues the Company

The "takeover offer" being made to all shareholders in Micheal Hill International Ltd [MHI.NZX]by the Michael Hill Family Holding Company Durante Holdings Pty Limited (Durante), the holding company for the 47.63 per cent of the total shares in MHI owned by interests associated with Mr Michael Hill, is one that has appeared to get around the takeovers code by offering to buy 5% of current MHI shareholders in the company an offer to buy their shares at 90c each.

Typically any shareholding above 50% automatically kicks off what should be a full takeover for the target company but MHI seems to have found a loophole after abandoning an initial plan back in September after floating the idea initially in August.

Of course any shareholding above 50% gives the owner complete control of the company.

I labelled this a Claytons takeover in August and still consider this a blatant disregard for shareholder rights.

I will not be selling any of my shares for the above reasons and because the offer of 90c per share for effectively full control of the company is not enough premium for full control and undervalues the company and its long term potential.

I possibily risk a potential interview with Michael that I have been trying to organize for 2011 (I have his cell phone number but he doesn't always return his calls) by speaking out like this but I care about shareholders before the business owners.

If you are thinking of selling, please don't. Apart from the shenanigans associated with this power play the company is very well managed and has a great long term future and you would be undervaluing your investment in the company if you sold so cheaply.

Disc I own MHI shares in the Share Investor Portfolio

MHI Takeover

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