Take it or leave it: Chinese giant plays it tough as Fisher and Paykel Directors reject takeover bid.
The Haier Group’s cash takeover offer of NZ$1.20 per share for appliance giant Fisher and Paykel has been rejected by four F&P Independent Directors, today.
Fisher and Paykel Applainces four Independent Directors have “unanimously recommended shareholders do not accept” Haier’s takeover offer of $1.20 ps, in a statement released today.
The Directors said the offer “does not adequately reflect their view of the value of FPA based on their confidence in the strategic direction of the company”
However, the China based white goods giant who already has a 20% stake in F&P says the cash offer represents “excellent value” for shareholders.
The offer for full control of F&P’s Australia and NZ operation was made through Haier’s New Zealand subsidiary last month.
But Haier is now playing hard ball, warning F&P’s Independent Adviser’s valuation range of $1.28-$1.57 per share price range, announced today, is “overly optimistic” and fails take into account the ‘risks’ contained in the company’s five year strategic plan.
Haier is warning F&P shareholders will need to decide between “the certainty of Haier’s offer or taking a significant risk on the achievability of the Independent Adviser’s valuation range.”
“The offer price is a significant 60% premium to Fisher & Paykel Appliances’ share price as at the close of trading on Friday 7 September, before the market was advised of the potential takeover ,” the company warned in a statement today.
Haier already has several of F&P’s large shareholders on board including Allan Gray Australia, which holds 17.46% stake, has entered into an irrevocable agreement to accept the offer.
Liang Haishan, Haier president and NZ Chairman said this agreement represents a strong endorsement of his company’s takeover bid of NZ$1.20 per share, which is a 91% (share) premium to the weighted average trading price over the three month period up to the takeover bid was announced.
Liang also warned that if Haier’s offer does not succeed, a large decline in the share price from current levels is likely, noting Fisher & Paykel shares has traded as low as NZ$0.33 in the past 12 months. F&P’s shares rose signifcantly in New Zeland after the bid was announced and are currently trading at NZ$1.22.
F&P shares have almost doubled in Australia since the takeover announcement was made last month, currently selling at A$0.97 on the ASX.
“This is appropriate and we also considered this information when determining our offer,” said Liang.
“There is a high degree of risk regarding the implementation of the five year strategic plan and achievement of the goals set out in it.
“In determining the offer price we have applied our significant, first-hand knowledge of Fisher & Paykel Appliances and the highly competitive global white goods sector, together with a consideration of the economic environments Fisher & Paykel Appliances operates in.”
Haier and Fisher & Paykel Appliances have had a cooperative relationship for a number of years, extending beyond 2009 when Haier supported Fisher & Paykel Appliances’ recapitalisation, he added.