Bendon assets lure new buyer

By ELLEN READ

An Eric Watson controlled company has joined the fight for lingerie manufacturer Bendon, for which his wife, Nicky Watson, is one of the premier models.

Pacific Retail Group (PRG) yesterday bought a 15.5 per cent stake in Bendon Group, courtesy of Tower Asset Management, for $9.7 million, or $2 a share.

Bendon Group shares closed at $1.92 yesterday, their highest level since early November.

The move has further complicated a planned management buyout of the group's operating subsidiary.

In November, a consortium led by Bendon Group managing director Hugo Venter offered $38.5 million for the business, with the support of 26 per cent shareholder AMP Henderson.

On Monday, news broke of a second offer.

Directors said the new offer, by an undisclosed party, was for an amount similar to the Venter offer.

Bendon and analysts have declined to comment on who the second bidder is, but it is thought to be a rival Australian firm which showed interest in Bendon last year.

Both bids are for the operating subsidiary only, not the cash assets, of Bendon Group, which has an estimated $17.5 million remaining from last year's sale of another subsidiary, NZ China Clays.

Bendon directors have required all bidders to submit binding offers by February 1, after which they are expected to recommend a preferred buyer to shareholders next month.

A Grant Samuel report for the board on the Venter/AMP bid is due at the end of this month.

Shareholders are expected to decide the company's future at a meeting in March.

PRG said it would participate in the Bendon sale process.

Peter Halkett, PRG's chief executive, said that although the move represented a departure from the group's traditional activities it was "firmly in line with both PRG's expansion strategy and the aspirations of its major shareholder".

"This is not a short-term opportunity to make a few bucks and pass it on to a trade sale," said Mr Halkett.

"[Although we haven't yet] done due diligence, we are looking to operate that business."

One analyst said that PRG's retail skills would cross over to the apparel business.

"It's all about being a good retailer. And it's no secret that PRG are looking for other retail options.

"The company has a wide open share register, which makes it vulnerable to takeovers."

PRG is 73.2 per cent owned by Logan Corp, controlled by Cullen Investments, a company associated with Mr Watson. Nicky Watson models Bendon's Fayreform brand.



Analyst Brian Gaynor said last month that the proposed acquisition of Bendon was a clever way around the Takeovers Code.

Writing in the Business Herald he said:

"Bendon's shareholders must approve the sale but this process will allow Mr Venter's consortium to gain full control with a 75 per cent approval compared with 90 per cent required for compulsory acquisition under the Takeovers Code.

"The appraisal report ... could be contentious because independent valuations are usually based on management forecasts and Bendon's managing director is fronting the offer."