Investors in spin on Vertex bid

The Christchurch-based Stewart family's investment firm Masthead has raised the stakes in the quest for Vertex, increasing its offer by 15c a share to $2.05.

The new offer, which values the plastics packaging group at $66 million, kicked off a tumultuous day for the group's shareholders.

It was followed by a statement that an un-named rival was looking over the company - then another that the bidder had withdrawn.

Vertex shares leaped 16c to close at $2.01 yesterday in reaction to the higher offer of $2.05 from Masthead. The offer is conditional on gaining 50 per cent control and closes on May 17. Previously the acceptance rate was 90 per cent.

Masthead's takeover has served as a circuit breaker to Vertex's boardroom troubles that developed after the Stewarts bought into the company.

The family controls a rival plastics manufacturer, Alto Plastics.

Board appointments of three men linked to Masthead sparked allegations they had a conflict of interest and lead to a boardroom deadlock, which was only resolved by the court appointing Tony Frankham as interim chairman.

Frankham yesterday rejected the new offer even after the mystery bidder withdrew."I'd expect Masthead to increase its offer further because they are anxious for the company," he said.

Masthead's new price is the same it paid Gould Holdings (the investment firm of Christchurch businessman George Gould) for its initial 19.9 per cent stake in September.

At the time, the price represented a 40 per cent premium to the market price. The amended offer is still 9c below the $2.14-$2.39 price range given by independent valuers Grant Samuel last month.

Frankham said independent directors had been discussing a price of $2.09 with Masthead this week. However, the talks failed because issues other than price could not be agreed.

Masthead director Mark Stewart said he had received phone calls from large shareholders expressing interest in the offer yesterday and took that as an indication that the price was attractive.

ACC, which with private investor Hemat Patel, used to hold the second biggest stake in Vertex behind Masthead, has most of its 4.8 per cent stake to hedge funds.

First NZ Capital analyst Dwane Clark said he thought $2.05 was a reasonable price, given the state of the market. "In my view, they always had to pay $2.05 given that's the price they paid for their initial stake.

"I think it will go places, the share price is implying that it will."

Masthead could extend the offer twice more before its final closing on June 23.

It has indicated that if its offer becomes unconditional it will seek the resignations of Vertex managing director Paddy Boyle and independent director Sandy Maier.
An earlier counter-bidder pulled out of the running after Easter when it found similarities between the two businesses were not as strong as it thought.

All go

9:30am: Masthead increases its takeover offer from $1.90 to $2.05 a share.
12:30pm: Vertex's independent directors reject the offer, saying a third party had requested due diligence on the company.
5:30pm: Unnamed third party pulls out. Masthead's $2.05 offer still not recommended.
6pm: Masthead says its stake has risen to 22.88 per cent.