Sharks Circle ADB, IAG

By Glenn Dyer | More Articles by Glenn Dyer

Adelaide Bank has warned shareholders to beware of a company offering to buy their shares at the knock down bargain of around $7.80, compared to the current market price, which topped $15 on Tuesday.

The bank said in a statement to the ASX that shareholders were receiving letters from a company called "Hassle Free Share Sales Pty Ltd" offering to buy their shares for $7.79 each. ADB shares closed at $15.08 on Tuesday, when ADB revealed the approach.

The shares fell under $15 this week on fears about financial stocks, before rising 10c yesterday to $14.65.

"This offer is significantly under the current market value of Adelaide Bank shares and should be ignored by our shareholders," Adelaide Bank's head of investor relations, Will Rayner said.

"The offer is seeking to take advantage of uncertainty that might exist in shareholders' minds about the current merger proposal with Bendigo Bank.

Insurance Australia Group (IAG) warned the market in July that it had received a request for a copy of its share register from a company called Share Buyback Group Ltd.

Also that month, ASIC banned Share Buyback Group from making any more offers, ruling that the company's actual name could mislead shareholders.

But IAG warned that it feared that Share Buyback Group could make a new offer under the different name, Hassle Free Share Sales Pty Ltd, the one making the offer to ADB shareholders.

IAG shareholders then received unsolicited offers from a company called Share Buying Group Ltd

That seems to have links to Hassle Free, according to ASIC.

Share Buying Group offered $2.67 for each IAG share, which were trading on the exchange at $5.24 at the time.

IAG shares have drifted lower since then, spending time around $5 or just above before easing earlier in the week to $4.80. The recovered 9c yesterday to $4.98.

ASIC says Share Buying Group and Hassle Free Share Sales are separate companies trading under separate Australian business numbers but that the director of Hassle Free Shares Sales, a woman called Suzanne Lee Forster, is also a director of Share Buyback Group Ltd.

ADB told shareholders in its statement that the merger with Bendigo Bank has the unanimous support of the Adelaide Bank board, and independent experts KPMG Corporate Finance have determined the merger is in the best interests of shareholders. The Hassle Free Share Sales offer is totally unrelated.

"We would urge shareholders to seek independent financial advice and check the current price of Adelaide Bank shares before taking any action on unsolicited offers to buy their shares."

Mr Rayner said a number of shareholders had expressed concern about Hassle Free Share Sales obtaining details of their shareholding.

"A company is required by law to provide a copy of its share register to anyone when asked to do so. Unlike IAG, the ADB board seems not to have resisted the approach for the share register.

"Unfortunately, we cannot control what they might do with this information. Adelaide Bank will be writing to every shareholder in the coming days to warn them about this predatory offer, and to help them protect the value of their investment," Mr Rayner said.

ADB shareholders are due to meet on November 12 to vote on the scheme of arrangement merger with Bendigo Bank.

As a result, ADB's 2007 AGM has been delayed until a new date which will be fixed once the scheme meetings next month are out of the way.

The 'offer' from the predator was obviously made to coincide with the arrival of scheme booklets with ADB shareholders late last week (and by Monday of this week at the absolute latest).

It's designed to give shareholders worried about the paper work involved in the scheme and the fat booklet an 'easy' way of selling their shares.

It's a cheap shot designed to exploit nervous people.

Meanwhile the Australian Securities and Investments Commission (ASIC) has also warned Australian investors about investing in offshore financial products that do not comply with local requirements.

ASIC says its warning follows recent advertisements by a New Zealand company, Asset Finance Ltd, in the Australian press offering investment opportunities with returns in the range of 9.75% to 12% per annum for debenture stocks.

"While investors in this case were directed to a New Zealand website and could invest via a New Zealand prospectus, a prospectus was not lodged with ASIC and did not, therefore, comply with Australian disclosure requirements," ASIC said.

"Australian investors should take extreme care before investing overseas as they may not be protected by Australian law. If you take up an offer of securities from an overseas entity that has not complied with Australian law or deal directly with an overseas broker, you may lose the protections provided by Australian law", ASIC's Executive Director, Consumer Protection, Mr Greg Tanzer said.

ASIC says it has obtained an undertaking from Asset Finance to stop making further offers in Australia other than in full compliance with Australian requirements.

ASIC has been informed that in this particular case the offer was unsuccessful and no funds were actually raised in Australia.

Under Australian law, every business that gives investment advice must be licensed by ASIC and companies that offer shares or other securities to the public must issue a prospectus and lodge a copy with ASIC.

"The prospectus is an essential document that tells you what you need to know to assess the risks of an investment including information about the company offering the investment and the investment itself.

"While it's not a guarantee of performance, you can use the prospectus to make an informed decision about whether or not to inves

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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