Bendon board between a rock and a hard place

By ELLEN READ

The board of lingerie manufacturer Bendon is facing a nasty dilemma.

The company has two takeover offers on the table, one for the whole company at $1.90 a share and conditional on 50 per cent acceptance, and one at the equivalent of $1.99 a share just for the operating subsidiary, Bendon Ltd.

The company comprises Bendon Ltd plus cash of around $17.5 million held by Bendon Group. Theoretically the higher priced offer should be more attractive, but the board's preferred offer structure is for the whole company, giving the $1.90 bid the upper hand.

Add to this the fact that the $1.90 bidder already holds 19.05 per cent of the company and could block the rival bid and the board is stuck between a rock and a hard place.

The management consortium aiming to take over Bendon's lingerie business created the dilemma when it increased its offer.

The new bid from the consortium led by managing director Hugo Venter, in association with AMP Henderson, is $42 million (up from $38.5 million) and would provide Bendon shareholders with between $1.96 and $1.99 per share depending on the final value of the cash assets.

The other offer for Bendon is a $1.90 a share offer from Pacific Retail Group (PRG) for the Bendon Group. PRG - which is 73 per cent owned by a subsidiary of Eric Watson's Cullen Investments - already holds 19.05 per cent of Bendon Group.

PRG has told the Bendon board it will vote against the AMP/Venter proposal, which would make it difficult to have that sale approved by the required 75 per cent of shareholders, Bendon chairman Ian Parton said.

Bendon enjoyed a surge in popularity yesterday as unofficial news emerged of the increased takeover offer. The company's share price rose 6c to close at $1.93.

Mr Venter had foreshadowed the amended offer but because it is from a party not listed on the New Zealand Stock Exchange, he was not obliged to notify the exchange.

But once Bendon directors become aware of the information, formal or informal, they had to tell the exchange.

Several brokers expressed frustration with this process, with one saying it highlighted how "mickey mouse" the regulations were. They said it was unfair some market players obviously knew about the likelihood of an increased offer before others.

Bendon's directors issued a statement late yesterday, saying they had received the Venter consortium's amended offer but had no recommendation on it at this stage.

They will release their recommendation, along with the target company statement, next Tuesday.

An independent assessment of the lingerie business by Grant Samuel and Associates valued Bendon Group at between $1.94 and $2.19 a share.