Talk about convoluted – the battle for control of Sydney fund management group, Hunter Hall (HHL) got even more complicated yesterday when Sydney based investor, Washington H Soul Pattinson (SOL) upped its bid by almost a third to $2.60 a share (from the previous $2 a share).
The move briefly lifted the offer price for the shares above the market after Soul Patts said it would pay the extra price if it got to 44% of the funds manager.
That move appeared squarely aimed at founder and former managing director and chief investment officer Peter Hall, who sold 19.9% to Soul Patts for $1 a share, triggering the current battle, and agreed to deliver the remaining 24.05% stake to them at the same price, barring a superior offer, which then emerged.
Mr Hall still retains that stake and barring a higher offer emerging, it will probably go to Soul Patts, unless Mr Hall wants to keep an equity stake in the expanded business. He would have a stake of between 6% and 7%, which is really not significant, especially seeing he triggered the original bidding war back on December 28 by walking out of Hunter Hall and selling the 19.9% to Soul patts at $1 a share.
The new bid price from Soul Patts is an 8% premium to the $2.40 a share offer from Pinnacle Investment Management if it clears the 44% holding hurdle.
But if Soul Patts falls short of that level the offer remains at $2 a share. Hunter Hall shares rose more than 4% yesterday to $2.67 as punters speculate another offer will emerge, possibly from Pinnacle.
The bid also remains below the $2.75 price nominated by independent experts for the Hunter Hall as the bottom of the valuation range for the stock.
A successful bid would give Soul Patts a second bite at Hunter Hall, whose board late last week endorsed a reverse, all-scrip takeover of Pengana Funds Management.
As Soul Patts already owns 37% of Pengana and it would hold 32% of a merged entity with more than $3 billion in funds under management, including $955 million coming from from Hunter Hall.
But the deal will dilute existing Hunter Hall shareholders, who will end up with just 27% of the merged entity, and the influence of the other major shareholders on the register.