Bitter row sparks Vertex bid

Masthead director Mark Stewart announces the intention of a full takeover of Vertex. Picture / Fotopress

A bitter board dispute has erupted into a $49 million takeover bid for plastic packaging company Vertex Group.

Masthead Equities, an investment vehicle for the Stewart family, has launched a $1.90 a share bid just over five months after buying a fifth of the company from South Island investor George Gould.

The offer is at a 19 per cent premium to Vertex's $1.60 closing share price yesterday and values the company at $61 million.

It is conditional on Masthead securing 90 per cent of the company.

Masthead director Mark Stewart painted the bid as an attempt to resolve deep divisions in the board which in December saw Vertex directors Sandy Maier and Paddy Boyle take the dispute to court.

They sought to have Masthead's appointment of three directors to the board, including Mark Stewart, declared illegal in a case that highlighted concerns about potential conflicts of interest from the Stewart family's majority interest in Vertex rival Alto Plastics.

"The history of this company has been a sorry mess ... We've been worn down by unreasonably obstructive behaviour and costly legal action," said Stewart, who said Masthead faced lawyers' bills of several hundred thousand dollars.

The bid is the latest twist in Vertex's chequered two-year history on the sharemarket, during which time it has had four chairmen, made two profit warnings and suffered an investigation into its prospectus forecasts by the former stock exchange watchdog, the Market Surveillance Panel.

Stewart said he hadn't been happy with Vertex's performance under Boyle's direction as managing director, and the resignation of chief financial officer George Clark because of the dispute was the "straw that broke the camel's back".

Clark, whose resignation was announced to the market yesterday, had served 20 years with Vertex and was leaving because of the board rift, Stewart said.

"Our view is that it has really been a disaster for us ... frankly, it is getting out of hand."

He said the company had two choices: sell up and take a loss after paying $2.05 a share months earlier, or bid. "We think it's a good solution."

Others said Masthead would not spend more on Vertex if it didn't see some value.

One fund manager said having only invested $13 million in Vertex in the first place, the Stewarts could have worn a loss of a few million if they had sold.

"You don't ship out another $48 million if you think it's a disaster," he said.

"My guess would be they have seen nothing there which would convince them there isn't some potential but don't believe current management can realise that potential."

Interim chairman Tony Frankham, who was appointed to the Vertex board by the court, said the board had not yet met to discuss the offer and would in due course form a view as to whether directors would recommend it.

"But obviously I see this as one of the ways in which the differences between the members of the board might be resolved.

"Whether it is the way resolution can be achieved will depend on the success of the offer," the interim chairman said.

The target:

Vertex Group

The plastic packaging company listed in July 2002 at $2.05.

It makes products such as meat trays and kiwifruit packaging.

Two months after listing, the company downgraded profit forecasts to 15 per cent below prospectus forecasts.

The Market Surveillance Panel investigated the forecasts and said a profit downgrade should have occurred earlier.

The bidder:

Masthead Equities

An investment company for the Stewart family of Christchurch.

The Stewarts previously controlled listed electronics company PDL Holdings.

They also have an interest in rival plastics moulding company Alto Plastics, which makes plastic bottles and packaging.

Masthead bought 19.9 per cent of Vertex from George Gould in September 2004 for $13 million.