KEY POINTS:
When Christchurch businessman Sir Robertson Stewart bought PDL in 1957, it was a clapped-out war munitions manufacturer. Over the next few decades he built it into a large, electrical equipment manufacturer with annual revenues of $350 million, 2000 staff and 11 manufacturing facilities.
But after going into the
business straight after university and spending 20 years representing it in tough Asian and Middle Eastern markets, Sir Robertson's son Mark took the reins. A few years later he sold his family's stake in the listed company to French company Schneider for $97 million, "an offer we couldn't refuse".
Since then, through his family's investment vehicle Masthead, Stewart has bought out Alto Plastics, controversially took over rival Vertex and merged the two companies before selling out two years ago to Visy Industrial for $200 million.
Stewart is mulling a third and full offer for fast-growing clinical services company Abano, after his second, partial takeover bid at $5 a share was killed off by Australian private equity firm Crescent Capital's $5.20 offer for 100 per cent of the company this week.
Stewart insists Masthead's intentions all along have been to become the majority owner of the company but to leave it listed and share the gains the company would make with other investors.
Others are suspicious of Masthead's intentions and wonder whether this scion of a respected industrialist has now eschewed business ownership for the altogether murkier world of corporate raiding.
"We are looking to be long-term shareholders in an industry, not short-term ones. But in saying that, opportunities do present themselves," the 45-year-old says with something of a glint in his eye.
Should Masthead choose to accept Crescent's offer, it stands to make a profit of almost $17 million on its original investment, apart from whatever upside it can extract from the private equity outfit, which needs Masthead's stake to succeed.
"It's not a bad position to be in. Up until yesterday we were very firmly buyers and whether we are still buyers is yet to be determined. I think $5.20 is a good price, there's no doubt about that. What's the final price? Who knows."
Shares closed yesterday at $5. Masthead originally bought into Abano at $1.55 a share just over a year ago, buying Eric Watson's 19.9 per cent stake for $7 million.
At the time that was a not insignificant premium to the market price of just over $1.20.
So why did Masthead pay over the odds for the company? Stewart says he was simply looking for a sound investment for his family's cash in an industry with good long-term prospects.
"We like the healthcare sector, we've been studying it for some time It's a big industry with lots of opportunities." Apart from its Abano stake, Masthead also holds 10 per cent of medical equipment supplier Ebos.
"We see the healthcare sector expanding through demographics, and we see the public health systems struggling therefore we see private healthcare increasing."
Nevertheless, Masthead struggled to justify its own $5-a-share offer.
"The reason for that is you've got a set of projections out there that are very, very bullish, five years with no hiccups to get these sort of numbers is a hard thing to undertake.
"I certainly have faith in the management of the business, I'm not sure that the directors are as on top of the business as they could be. They're independent directors, they've got no money on the table, yet they're making lots of very expansive statements about the future."
It's been clear over the past few months there's little love lost between Abano's board and Masthead.
Perhaps the key to that lies in Stewart's recent record. Masthead's purchase of a stake in Vertex turned messy with the company's board going to the High Court to keep Masthead out of the boardroom because of its ownership of rival Alto Plastics.
"Of course that's the equivalent of war, so at that point we became determined to win."
Win it did, eventually succeeding with a takeover after a bitter battle.
Stewart believes management are being somewhat overoptimistic.
"The idea of us putting a partial offer in was to sit alongside management as the largest provider of money to make sure it does happen. We could get alongside the business and help it develop further and we do have quite a bit of experience in the market areas that they want to operate in."
Masthead, which operates a fund on behalf of various members of the Stewart family, consists of Stewart and former Canwest chief financialofficer Warwick Webb.
"It's quite a good partnership with Warwick. He's a financial man and I'm probably more the ideas person."
So what is Masthead worth?
"I can't say that. It's worth a bit, enough to be able to undertake takeovers like this. We don't like talking much about what we do in a private capacity. We have a lot of private interests that are private for a reason."
Mark Stewart
Director of Masthead Portfolios
* Age: 45
* Education: St Andrew's College Christchurch
Canterbury University bachelor of commerce
* Lives: Windwhistle, an hour west of Christchurch near the Mt Hutt skifield
