Big stakes up for grabs in GPG sale

Tony Gibbs, who was booted off the GPG board last year, said the decision was a triumph for shareholders. Photo / Paul Estcourt

Major stakes in insurance company Tower and food producer Turners & Growers are to be put up for sale after Sir Ron Brierley's Guinness Peat Group revealed plans to sell off its investment portfolio.

GPG yesterday told the market it would return $158 million in capital to shareholders this year and embark on a realisation strategy which could leave it owning just its thread-making business Coats.

The decision was driven by a recommendation from GPG's new independent directors who were appointed to the board in September after New Zealand shareholders protested over a proposal to split off the Australian business.

Shareholders Association chairman John Hawkins said he was pleased with the announcement.

"It shows ... the independent directors are putting shareholders first instead of a situation with an old boys club running it. I think they have been decisive in coming out with a strategy.

"Sure we don't know all the details at this point and I think it will take a while to work through but at least they now have a strategy which was sadly lacking before."

He also supported the decision to hold the annual general meeting in New Zealand, a move which the association had been calling for for years.

The meetings have previously been held in London, as the company is UK domiciled, despite having a large number shareholders and capital note investors in New Zealand.

"It's a breath of fresh air."

Hawkins said it didn't have a lot to say about the sale of the stakes in Tower and T&G other than that it wanted to get the best outcome for shareholders.

But he said the association hoped they would remain listed.

"We are concerned that the local sharemarket is heading for a low ebb and we would like to see whatever happens with any company to remain in a listed form."

Tony Gibbs, a former GPG director who was booted off the board last year for speaking out against its plans, said the decision by GPG to sell down most of the assets and return money to shareholders was a "triumph" for all shareholders.

Gibbs, who remains a chairman of Tower and Turners & Growers, said he accepted those stakes would be sold and he was prepared to help aid the sale process.

GPG owns 35 per cent stake of Tower and 66 per cent of Turners & Growers.

Gibbs said it was a possibility that the stakes in both companies could be sold to foreign buyers but hoped they would attract local interest.

"I would be very hesitant to sell to hedge funds, these companies need to be kept whole and hopefully within the bounds of New Zealand. But they will be attractive to foreign buyers."

One market source suggested other GPG assets would be sold before the Tower and T&G stakes as they were strategic.

Interest was expected to come from trade buyers rather than institutional investors. Tyndall Investment Management's Rickey Ward said the 35 per cent stake in Tower was unusual as a potential buyer would have to either sell it down to the 19.9 per cent limit or make a full takeover for the company.

"It may be that buyers are interested in different parts of the business."

He expected T&G to be a harder transaction because behind GPG there was a 12 per cent stake owned by one family who could block a takeover.

Ward said GPG's asset sell-down announcement had sent a clear signal to investment bankers to come forward with their best offers.

But he said GPG had a good track record of extracting value from asset sales and they weren't expected to be a fire sale.

GPG shares closed up 7cc on 7c yesterday, while Tower shares close up 5c on $1.99.