KEY POINTS:
CanWest MediaWorks NZ's second biggest shareholder, Brook Asset Management, says it does not intend to try to block Australian private equity fund Ironbridge's takeover bid for the company at this stage.
Brook's executive chairman Simon Botherway says Brook will await the independent experts' report on the offer before
deciding its next move.
But while he says a blocking move is not on the cards now, it may well transpire that way. "We are in not in a hurry to make a decision either way," he says.
Brook has increased its MediaWorks stake to about eight per cent from 7.29 per cent since Ironbridge made its offer, raising speculation that it may act as a spoiler.
Parent company CanWest has agreed to sell is 70 per cent stake to Ironbridge at $2.43 a share. Under Takeovers Code rules, Ironbridge must extend this offer to all Media-Works shareholders.
Ironbridge needs to reach 90 per cent to compulsorily acquire the rest of MediaWorks' shares and de-list the company.
This means Brook needs to get just over 10 per cent if it wants to block the takeover by itself.
"The key from our perspective is the independent report and it's not so much about the actual valuation range, or the mid-point of the range. It's really about the forecasts," Botherway says.
"We want to take a look at those forecasts and derive our own valuation and we'll make a decision accordingly."
Botherway concedes there has been talk about Brook's moves since the takeover was announced. "It is simply a portfolio holding and we have not paid in excess of the bid price at any time," he says.
Brook has been on MediaWorks' share registry since its initial public offer in 2004.
"We think that they have got strong positions both in free-to-air TV and in radio, across a whole range of formats, a very good industry position, excellent management, good long-term free cash flow and growth potential," he says.
"Our holding simply reflects our confidence in the company and it's not a huge holding against the background of the $1.4 billion we have under management."
Should the takeover strike trouble, there is a possibility Ironbridge might opt for a "scheme of arrangement" under the Companies Act, similar to the way Australia's Transpacific Industries took over Waste Management, requiring just 75 per cent of the stock, last year.
Rickey Ward at Tyndall Investment Management, which has a stake of less than five per cent in MediaWorks, says the offer price appears to be at a discount when compared to the price paid for other such companies, mostly Australian, in the sector.
If the full takeover is unsuccessful, he doubts that Ironbridge would put up with MediaWorks continuing as a listed entity.
"As an investor, I have yet to have come across a private equity firm that likes to have a partially listed vehicle," Ward says.
"In other words they would be held accountable in a very public arena and private equity groups don't tend to like that."