Edison offer wins chairman's vote

By CHRIS DANIELS

Take the offer while it's on the table, because you won't see better for a while, says Contact chairman Phil Pryke.

After a 2 am phone call from United States energy giant Edison Mission yesterday, Mr Pryke has decided to advise shareholders of New Zealand's third-largest listed company to sell their stakes at $4.25 each.

Edison is paying $4.14 of that price, and the remaining 11c will come as a dividend.

It first offered $3.85 a share, announcing on October 12 that it wanted to buy the 49 per cent of Contact it did not already own.

Mr Pryke and the other independent directors had this week decided to recommend shareholders reject this deal, after independent valuations put the company's shares at between $4.11 and $4.66 each.

"We are now in a position where, on balance, we recommend shareholders accept the offer," said Mr Pryke yesterday.

"There is a low probability of a successful competing offer at a similar or higher price.

"If the bid fails, it is likely the share price will fall from current levels."

He said that compared with Contact's issue price of $3.10, shareholders were getting a nearly 50 per cent return on their investment in two and a half years.

ABN Amro energy analyst James Miller said the Edison offer was still too low, and should be judged as being $4.14, because the other 11c was a dividend due to shareholders anyway.

Mr Miller said the increased offer was merely "bidding games" from Edison.

Mr Pryke's comment that the share price would drop if the Edison offer failed was incorrect, as Contact had become an increasingly good investment.

His comments were backed by JBWere analyst Peter Sigley, who said Edison was "being too cute" with the price.

Valuers Cameron & Company had told the independent directors that $4.22 to $4.66 a share was a fair range.

Edison's new offer had just dipped into the bottom of this, more credible valuation, said Mr Sigley.

Edison Asia Pacific's senior vice-president, Bob Driscoll, said he still thought the original $3.85 offer was fair and reasonable.

It had been lifted to $4.25 after independent valuers Grant Samuel valued the shares at between $4.11 and $4.51 each.



Mr Driscoll said discussions with independent directors had been going on for the past week.

Mr Pryke said he was told of the $4.25 price by Edison in an early morning phone call yesterday.

The formal offer from Edison, with the independent directors' recommendation to accept the price, and the Grant Samuel report will be sent to shareholders at the end of next week.

Mr Driscoll was adamant that this was a final offer price - a "one-time revision" that was now at the printers and would not be changed.

But he was confident the offer would be successful.

Contact shares closed up 5c at $4.17 yesterday.