GILES PARKINSON*
There was more than just a hint of irony last week when BHP announced that Peter "PacMan" Smedley would be chairman of its OneSteel spin-off on the same day it launched its first aggressive share market raid since the late 1980s.
Smedley's PacMan moniker was earned during his time at Colonial, when he transformed a slumbering mutual into a dynamic financial group that earlier this year attracted and accepted a $9 billion offer from Commonwealth Bank.
His brief at OneSteel will be similar. Steel has been slumbering, but now it must be revitalised as it seeks the support of public investors and tries to stave off the challenge of the Smorgon family.
The Smorgons, who floated their own steel group just two years ago, had launched the biggest threat to BHP's domination of the steel and metals business with their $785 million bid for Email.
Smorgon has developed a taste for acquisitions. It snapped up ANI soon after its listing, then succeeded in taking over MetalCorp, a target which BHP apparently had looked at but rejected.
Combining the businesses of Smorgon and Email would lift its market share to 50 per cent of the local distribution market, and allow it to source more steel from its own businesses at the expense of BHP, which would find itself in the improbable position of playing second fiddle.
This was not a scenario the BHP board wanted to entertain as it readied OneSteel for its float, so the share market raid orchestrated by Credit Suisse First Boston last week was crucial to the survival of the company's plan for the steel business. It now has a 15 per cent stake that can block any further proposals by Smorgon, who might have been too clever by half. By making a hybrid offer of $1.85 cash and a security in the unwanted appliance business that it would have floated, Smorgon left its flank open to uncertainty about the value of its offer.
Smorgon suggested on Friday that it is not done yet. That seems to suggest it would be willing to top the price paid by BHP with a full cash bid.
Its original hybrid offer had a notional value of $2.89 a share. BHP paid $3.30, or $125 million, to protect the interests of its $2 billion steel float. It will take a generous offer indeed for Smorgon to be able to unlock BHP's grip on the company.
This column made mention last week of the apathy among institutional shareholders when it came to tackling boards of underperforming companies.
Professional fund managers rarely bother to voice their opinions at the one opportunity they have each year to speak in a public forum - and it seems small investors are also happy not to make a fuss.
On Friday, the shareholders of a struggling internet provider gathered for their first annual meeting, no doubt concerned about the collapse in its share price, which has seen about 90 per cent wiped off its value in recent months.
Eisa, which listed last August, made an audacious grab for the residential ISP business of OzEmail, even though the target was about six times its size.
It huffed and it puffed and it very nearly got the deal together, or so it said. John Fairfax was signed on, along with ANZ, Hastings Funds Management and even the venerable Walt Disney.
But it only ever had half the funding it needed, and when the Nasdaq slump destroyed the proposals of those who had declared their interest, the deal - and eisa's share price - was doomed to oblivion.
One would expect, in such circumstances - and with eisa's share price suspended yet again - that shareholders might want to ask what went wrong. Not a bit of it. One question was asked - why acting chairman Evan Rees should be elected to the chair, and the response was that Rees was a terrific person who had done a good job.
He was elected unanimously and the meeting closed barely 20 minutes after it had begun. Not a single complaint.
* Giles Parkinson is deputy editor of the Australian Financial Review.
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