Chinese whiteware giant's anticipated takeover bid 'opportunistic'.
Chinese home goods giant Haier's anticipated takeover bid for Fisher & Paykel Appliances has been labelled "opportunistic" by a prominent fund manager, who says shareholders are unlikely to sell unless there's a very good offer on the table.
Milford Asset Management executive director Brian Gaynor said the East Tamaki-based whiteware maker had turned a corner since the dark days of early 2009, when it was struggling beneath a mountain of debt.
At that time Haier stepped into the picture, investing around $82 million in return for a 20 per cent stake in the Kiwi company.
F&P Appliances still faces many challenges, but it has resumed posting annual profits and its net debt was $65.2 million at the end of March, down from more than $500 million in early 2009.
"I've been quite impressed with the way [F&P Appliances] have turned it around," said Gaynor.
"The Chinese know what's happening. It does suit the Chinese - it would be a great purchase for them."
He said Milford and other New Zealand investors would be reluctant to sell "unless the offer is so good we can't refuse it".
It would be a real loss for the NZX if the appliance manufacturer were to leave the local sharemarket, Gaynor added.
F&P Appliances announced yesterday that Haier - one of the world's biggest whiteware makers, which posted revenues of US$23.3 billion last year - had expressed an interest in making a full takeover bid.
Asked when an offer was likely to be made, F&P Appliances chairman Keith Turner said: "That's a matter for Haier, but I guess we would expect something in the next few days given the fact that they [Haier] have contacted major shareholders over the weekend."
The Business Herald understands the Chinese firm tried to get those shareholders - Allan Gray (formerly Orbis Investment Management), ACC and AMP - to accept an offer ahead of a takeover bid, but no agreement was reached.
Haier has indicated that the potential offer would represent a premium to F&P Appliances' current share price.
Shares in the company rallied on the news of the possible takeover bid, initially surging 40 per cent to $1.05 - an almost four-year high - before closing up 22c at 97c last night.
The firm was valued at $702.5 million at the close of the market.
F&P Appliances said it had agreed to Haier's request to undertake financial and commercial due diligence that would allow its expression of interest to develop into a "complete proposal".
Haier is likely to be most interested in F&P Appliance's technology.
The New Zealand company is already supplying Haier with direct-drive washing machine motors, while its subsidiary, PML, has been building production lines for the Chinese firm.
In 2010 F&P Appliances unveiled a new fridge compressor, which the company says is 30 per cent more efficient than other technology and could revolutionise the industry.
Mint Asset Management portfolio manager Shane Solly said that the potential takeover highlighted the underlying value in some NZX-listed firms.
A buyout on spare change
In early 2010 I was in a group of Australian and New Zealand journalists flown to China to visit Haier's sprawling headquarters in Qingdao on the Yellow Sea.
We were directed into a meeting room and shown a promotional video about the company, which proudly stated its global expansion motto was, "Get in, stay in and take over".
It seemed quite an inflammatory statement, coming from a company that only a year earlier had purchased a cornerstone stake in Fisher & Paykel Appliances, New Zealand's biggest technology manufacturer.
Haier staff, however, were quick to play it down, saying "take over" really should have been translated from Mandarin as "be a leader".
Later that day, Haier's vice-president Zhou Yunjie told us the company had no plans to increase its stake in F&P Appliances.
But walking around the 810ha Haier HQ - with its own streets, shops and accommodation - it was clear the firm could do so if it wished.
In less than 30 years the company has transformed itself from a nearly bankrupt state-owned manufacturer, with just one line of poor-quality refrigerators, into one of the world's biggest whiteware makers, with products in more than 100 countries.
With annual revenue well over US$20 billion, a takeover of F&P Appliances might be small change for Haier.
* Revenue of US$23.3 billion ($28.7 billion) in 2011.
* 29 manufacturing plants across 25 countries (as of 2010).
* More than 80,000 staff.
* Products - including fridges, dishwashers, washing machines and televisions - sold in more than 100 countries.
* Partially listed on the Shanghai and Hong Kong stock exchanges.