Street Talk

Humm sale battle ready for the starting line

Anthony Macdonald, Sarah Thompson and Kanika Sood

May 17, 2022 – 9.33pm

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The starting gun’s about to be fired for the proxy war brewing at Humm Group.

Humm Group was originally called Flexigroup, which grew out of FlexiRent, started by Andrew Abercrombie. He retains a 20 per cent stake in the company. Craig Sillitoe

Humm’s board expected to dispatch explanatory booklets detailing Latitude’s $335 million scrip-heavy bid for its consumer finance business this week, and outline what shapes as the two camps’ opening statements.

The booklet’s expected to tell two versions of Humm’s mooted deal; one for, the other against. Version one would be from the majority of Humm’s board, who back the deal, while the second would come from director and 20 per cent shareholder Andrew Abercrombie, who hates it.

The “for” pitch is expected to be in line with what Humm told shareholders on signing the deal in February. It reckons the $335 million was a good price (especially after the rout in buy now, pay later stocks), its consumer business would benefit from Latitude’s scale and synergies, and that the remaining pure-play commercial business would have a better chance at re-rating.

Abercrombie, as a director, will also have the chance to make his pitch. He’s expected to argue Latitude’s buying Humm at its bottom (the business was hit hard by COVID-19 and has not yet reaped benefits of an investment program), and the long-term view would be to keep the whole thing together.

Both camps would be trying to move at least half of Humm’s register to their side, ahead of the vote next month. The deal’s structured as an asset sale (rather than a scheme) and would need approval from 50 per cent of Humm’s register to go ahead.

The booklet’s also expected to blow the cover on the split between Humm’s board on the Latitude deal.

Humm did well to keep the grumblings under wraps until last week, when Abercrombie requested a share register – on Arnold Bloch Leibler’s stationery, no less.

It’s more than the usual shareholder grumbling; Abercrombie controls a sizeable chunk of Humm’s register, is a director, and was also the founder of Humm’s original FlexiRent business and was CEO until 2003.