Rubicon directors advise against Knott share bid

Rubicon directors have recommended shareholders not accept a partial offer for the company, after an independent adviser assessed the shares to be worth as much as three times more than the offer price.

Knott Partners and associated funds are seeking to increasing their stake in Rubicon from 18.5 per cent to 27.3 per cent. If the bid was successful the Knott group and its associates would collectively hold or control 28.31 per cent.

An independent adviser's report by Grant Samuel, made public today, assessed the full underlying value of Rubicon shares to be in a range between $1.15 and $2.26 each.

Rubicon chairman Stephen Kasnet said the directors acknowledged that under current global equity and credit market conditions, Rubicon shares were not as liquid as the company would like.

They recognised there may be short term trading or liquidity reasons for shareholders to consider the offer.

"However, that aside, the directors recommend that shareholders do not accept the Knott Offer," said Kasnet.

The mathematical midpoint in the Grant Samuel range was $1.70 a share -- $1 above the Knott offer price.

Even the low-end offer of $1.15 was 45c a share, or 64 per cent, above the 70c offer price, and the offer price was well below Rubicon's current net asset backing of $1 per share.

But the directors did not oppose Knott seeking to increase its stake to 27.3 per cent and believed Knott would continue to fully support the company.

The directors considered Knott had been supportive of Rubicon and its objectives since becoming shareholders in December 2006, Kasnet said.

Also if Knott and associates were to increase their current 19.5 per cent shareholding to 28.3 per cent, the directors did not believed it would deliver Knott a control position in Rubicon, given the spread of the remaining shareholding positions.

The offer is being sent to shareholders, with a closing date of May 27, unless extended.

Rubicon was formed out of the separation of the Fletcher Challenge Group and listed in 2001. It included shareholdings in ArborGen and Tenon which are now its two remaining investments.

After considerable restructuring, Tenon is now a wood products company focusing on high value moulding and millwork markets in the United States. It is 58 per cent-owned by Rubicon.

ArborGen, a forest biotechnology company based in South Carolina whose research includes biofuels, is a third owned by Rubicon. ArborGen has a large Australasian operation.

Under the Takeovers Code, Knott will need shareholder approval to take its stake above 20 per cent.

Rubicon's share price was unchanged on 63c around noon.

- NZPA