Suitor's bid too low - Owens

By PAM GRAHAM

Owens Group yesterday advised shareholders against accepting Mainfreight's takeover bid because it was too low.

Chairman Norman Geary said Mainfreight should be able to raise its offer based on information now disclosed by Owens and if it did the board would look at it.

Mainfreight managing director Don Braid said his company was assessing an independent report released yesterday.

The report said the current offer was not fair.

Mainfreight, which owns a blocking 15.5 per cent stake in Owens, is offering $1.03 cash a share conditional on getting 90 per cent.

Independent adviser Deloitte Touche Tohmatsu said in the report that Owens shares were worth between $1.09 and $1.27 and could be worth as much as $1.58 if Owens' strategy of selling non-core assets and focusing on transport was successful.

Deloitte said it was a sound strategy but there were "considerable uncertainties" with implementation.

Because the offer was cash, Owens shareholders would not get any merger synergies.

"Post acquisition Mainfreight would be one of the most significant and influential players in the New Zealand logistics industry, with combined turnover in excess of $800 million," the report said.

"It would be the largest freight and transport network in New Zealand and the largest international freight forwarder in New Zealand."

The report said Owens was "well down the path" of seeking acquisitions of its own and had entered into non-binding heads of agreements on some of these.

It did not say if they included TranzLink, Tranz Rail's trucking and freight forwarding business, which Owens has bid for.

Deloitte said the logistics industry was highly competitive, barriers to entry were low and the keys to success were IT systems, which required significant investment.

Owens had a range of businesses in various locations and was trying to develop a "refined logistics offering" based on international freight forwarding, domestic transport and contract warehousing.

The company's result this year was affected by one-offs and next year's budgets did not include the impact of acquisitions currently being evaluated.

The report disclosed operating earnings of $3.9 million in the four months to July 31. It also said the company had budgeted for a loss in business from shipping company Maersk next year.

Deloitte said Mainfreight was unlikely to waive the condition of gaining 90 per cent acceptances, the level that allows it to compulsorily buy out remaining shareholders.

Seven Owens shareholders control 48 per cent of the shares and they are associated with the family or are institutional shareholders.

The board said certain big shareholders would not accept the current offer, so the 90 per cent condition would not be met.

Still, Mainfreight's 15.5 per cent stake in the company was an impediment to other offers.