By Claire Reilly
Haier has opened its full takeover offer for Fisher & Paykel Appliances, encouraging shareholders to take up the $1.20 being offered on each share, saying that it is a good opportunity for shareholders to “realise cash” from their investment in the brand.
In an official statement released today, Haier outlined the value of the offer – which stands at NZ$1.20 per share – and a number of guarantees or “intentions” on its treatment of the Fisher & Paykel brand moving forwards.
“This is an excellent offer and a very good opportunity for shareholders to realise cash from their Fisher & Paykel Appliances investment,” said Liang Haishan, chairman of Haier and president of Haier White Goods Group.
“We think the offer is particularly attractive given market volatility, recent economic uncertainty and increasing competition in the global white goods sector which adds risk to the achievability of market share and earnings growth.”
In the statement, Haier also made subtle threats indicating that if shareholders failed to take up the offer (which expires on 6 November 2012), Fisher & Paykel’s market capital value would drop.
“If the offer is unsuccessful it is likely that the share price will decline significantly, as the recent increase reflects the announcement of the offer. Prior to the announcement of the offer, the Fisher & Paykel Appliances’ share price had been below the offer price since 22 September 2008 and has traded as low as 33 cents in the past 12 months.”
Haier stated that the offer price of NZ$1.20 was “a significant 60 per cent premium to Fisher & Paykel Appliances’ share price as at the close of trading on Friday 7 September, which was the last trading day before the market was advised of the potential takeover offer from Haier”.
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There is palpable scepticism in the New Zealand market about the value of the offer, with one of New Zealand’s major news titles asserting that mum and dad shareholders still “have power to keep F&P Appliances local”.
The second largest shareholder in F&P Appliances after Haier, Allan Gray Australia, has already “entered into an irrevocable agreement to accept the offer” according to Haier. However, The New Zealand Herald noted that “retail” or non-institutional investors make up 30 per cent of F&P’s shareholders, and they had the power to prevent the takeover.
“Retail shareholders have the power to block China's Haier from pulling off its full takeover bid for Fisher & Paykel Appliances, which would allow the New Zealand whiteware maker to remain listed on the NZX,” read an article in the Herald.
“If Haier gains more than 90 per cent acceptance its full takeover will be successful and the company will de-list, leaving a big hole in the local sharemarket.”
Despite these worries, Haier’s chairman has insisted that a Haier-owned Fisher & Paykel would still maintain some of its independence.
“We would like to make it clear that we respect the Fisher & Paykel Appliances brand and business,” said Haishan. “Our proposal is to see the company continue as a strong, New Zealand based stand-alone company led by local management, but within the Haier group.
“We have been a shareholder since 2009 and have made a significant contribution to Fisher & Paykel Appliances. Our offer document contains a number of proposed intentions in relation to the future of Fisher & Paykel Appliances. These are not made lightly. They reflect our respect for the history of the business and its culture of innovation and achievement.”
While they are not ironclad, these “intentions” for the company include the commitment to “retain Fisher & Paykel Appliances as a stand-alone company led by local management”; “support the direction of Fisher & Paykel Appliances’ existing business strategy”; retain “key personnel” at the company (including maintaining the ratio of New Zealadnd or Australian resident independent directors on the board for “at least two years”); and retain the existing product development base in New Zealand.