Shares of Fisher & Paykel Appliances are set to jump to the $1.20-a-share offer price from Haier after the Chinese firm said it is aiming for a minimum 50 per cent acceptance and gained support from the target company's second-largest shareholder.
The shares rose to $1.04 yesterday, the highest since November 2008, before Haier unveiled its offer after the market closed.
The proposal values FPA at about $869 million and would see Haier pay about $695 million for the 80 per cent it doesn't already own. Allan Gray Australia has agreed to sell its 17.46 per cent into the offer, giving Haier an interest in 37.46 per cent.
FPA today said it has hired First NZ Capital and Bell Gully as advisers and confirmed its independent directors were supportive of the proposal, provided it tallies with an independent valuation of the business and in the absence of a better offer.
"The key thing in the bid is that it's only conditional on getting to 50 per cent," said Matthew Goodson, portfolio manager at BT Funds Management. With Allan Gray's stake locked up "it suggests $1.20 might get them there."
Goodson declined to say whether BT would accept the offer for its FPA shares, saying it was still evaluating the proposal. A 50 per cent stake would give Haier control and the ability to appoint directors, he said. The Chinese company had "massive resources" it could throw behind FPA's technology, while the New Zealand target has been forced to be relatively frugal in its spending.
FPA shareholders will be mailed a target company statement along with an independent valuation within 14 days of receipt of the takeover offer, the company said today.
The takeover requires approval from the Overseas Investment Office and is also dependent on the Reserve Bank not objecting to FPA continuing to operate an insurance business.
Haier plans to retain FPA's existing brands and businesses in New Zealand, Australia and the US, including the target company's chief executive and Auckland corporate head office, according to a summary of the offer. It will also "retain and respect the organisational culture, history and achievements" of FPA, it says.
The cash offer represents a 63 per cent premium over FPA's stock price of 75 cents last Friday, before Haier disclosed its interest on Monday.
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.
Haier has retained UBS AG as financial advisor and Simpson Grierson and White & Case LLP as legal advisers.