Shares of Fisher & Paykel Appliances soared 40 per cent to the highest level in almost four years after one-fifth shareholder Haier of China indicated it may offer to buy the whole company at a premium and approached three other major investors.
The stock jumped 25 cents to $1 on the NZX, driving up the market value of the company by $181 million to $724 million. No price was given for the possible takeover, which Auckland-based F&P Appliances said would represent a premium to the 75 cents the stock last traded at before the announcement. It was described as a potential cash offer subject to conditions.
The shares are now down slightly at 95c, up 20c - a 26 per cent increase for the day.
"They have indicated an expression of interest, done some limited due diligence and have been engaging with key shareholders," chairman Keith Turner told BusinessDesk. "It signals serious intent of making a share offer."
He declined to reveal Haier's indicative price, saying the company wasn't privy to conversations Haier had with other shareholders over the weekend and doesn't currently have an offer on the table. The company didn't have its shares halted from trading because it couldn't say when, if at all, an offer would be made.
Haier has asked to undertake limited commercial and financial due diligence and the target company subsequently provided an extract from its five-year strategic plan. That was released today after Haier advised F&P Appliances that was approaching the company's three other largest shareholders.
Among the F&P's biggest shareholders is Orbis Investment Management with 17 per cent, Accident Compensation Corp with 7.5 per cent, and AMP Capital Investors with 5.2 per cent, which would bring Haier within reach of a 50 per cent controlling stake.
The strategic review gives a forecast for 2013 capital expenditure of about $42 million while net debt will be "well below the $65 million as at March 31 this year, excluding the finance business.
The Chinese company injected much-needed equity in F&P Appliances as part of a $200 million rights issue in 2009 when the New Zealand company was forced to raise funds to repay bank debt. Since then, the local company has taken over distribution of Haier products in Australia.
The company reiterated its forecasts given in August for full-year operating earnings before interest and tax would be $70 million to $78 million, made up of ebit from Appliances' of between $35 million and $40 million and earnings from Finance of $35 million and $38 million.
The company's strategic review shows a concerted push to monetise licensing of its technology including its direct drive motors and compressors.
It gave a 2017 target for earnings in North America rising to US$20 million on an ebit basis from about US$1 million in 2012.