Haier, the Chinese home appliance company, has offered to buy the 80 per cent of Fisher & Paykel Appliances it doesn't already own for $1.20 a share, valuing the New Zealand company at about $869 million.
Qingdao-based Haier has gained the agreement of FPA's second-largest shareholder, that Allan Gray Australia, to sell its 17.46 per cent stake into the offer. That means Haier only has to get about another 13 per cent to win control of the Auckland-based manufacturer.
The cash offer represents a 63 per cent premium over FPA's stock price of 75 cents last Friday, before Haier disclosed its interest yesterday, and values the target at about $869 million. The stock soared to $1.04 today and hasn't traded at $1.20 since September 2008.
Haier effectively rescued FPA in 2009 when it acquired the holding as part of a capital raising that let the company refinance its debt. FPA got distribution into China as a result of the deal and the ability to further licence its technology.
"We believe the opportunity to receive cash and realise a significant premium over the current share price is attractive for Fisher & Paykel Appliances' shareholders, particularly given market volatility, recent economic uncertainty and the competitive nature of the global white goods sector," Liang Haishan, a director of Haier, said in a statement.
Allan Gray's acceptance of the offer "represents a strong endorsement of the value," he said.
The offer will open in 14 to 30 days, Haier said. Independent directors of FPA are supportive of the proposal, subject to an independent valuation and in the absence of a superior offer, it said. The Chinese company would have to pay about $695 million for the remaining shares.
The deal requires regulatory approvals and a minimum acceptance that gives Haier at least 50 percent of the company. It will have to make an application to the Overseas Investment Office.
Liang said FPA would remain as "a stand-alone company led by local management."
"We want the Fisher & Paykel Appliances brand to stay and we will support its growth as a global premium brand, with the additional advantages of operating within the Haier Group," he said.
Haier has retained UBS AG as financial advisor and Simpson Grierson and White & Case LLP as legal advisers.
Haier's Shanghai Stock Exchange-listed subsidiary, Qingdao Haier, was halted today pending the announcement.