Perth financier Merchant Group has taken a substantial bite out of Hills (ASX:HIL), the company famous for the Hills Hoist clothesline.

Merchant is sitting on 5.12 per cent of Hills, which at Tuesday’s price of 18c would have cost about $2.1m.

Clotheslines are no longer Hills’ beat — they sold the rights to make and sell the product invented in Adelaide in 1945 to gardening product manufacturer AMES Australasia in 2017 — and they’ve delved more into security and health services.

Merchant boss Andrew Chapman says they want a seat on the board in order to push through a few changes faster.

He says there are some businesses that could be spun out — the health ones that deal in nurse calls and patient engagement appeal to him on that front — and institute some capital management changes.

Hills CEO David Lenz said during the half year results that the health business was the star of the show, with sales rising 25.7 per cent.

Hills has a massive shareholder register of 13,000 investors and Mr Chapman would like to see a share purchase plan in play to give them a chance to get their stakes up to marketable parcels.

He says that what’s in it for Merchant is simply a higher share price once they’re done. He believes 40c a share is fair.

Solid if a bit random

Mr Chapman says the decades-old business is solid, it just isn’t moving fast enough for his tastes.

Hills made $132.3m in the six months to December 31, 3 per cent lower than the same period in 2017.

It made a $200,000 profit in the half.

Its share price has fallen by 90 per cent in the last five years from $1.74. The company’s market cap is just $42m.

Hills now consists of a range of businesses that have nothing to do with laundry tech.

There’s the security, surveillance and IT business, the audio visual business, health, an arm that makes and sells antennas, and an NBN connection division.

They also have an ecommerce wing, from which it sells products from all of the above businesses as well as services.

The company said in its half year report it has 3800 customers “on line”.

Hills is chaired by a scion of the family, Jennifer Hill-Ling, who has been on the board for 34 years and chairwoman for 14 years.

The Hills family owns more than 14 per cent of the company through the top two shareholdings of 7 per cent each.

Hills has been contacted for comment.