Graeme Hart's Rank Group has extended its $3.3 billion takeover offer for forest products company Carter Holt Harvey until November 25.
The offer was due to expire tomorrow, but, following an about-turn from Carter Holt's three independent directors - who yesterday recommended shareholders accept the $2.50 a share bid -
Rank has extended the offer by 22 days.
The move gives shareholders more time to consider whether to take up the offer.
Carter Holt's independent directors, led by Kerry McDonald, have steadfastly rejected the offer as too low throughout the takeover, which began in August when Rank Group bought International Paper's 50.5 per cent stake.
With Rank's stake yesterday creeping to 71 per cent, and a profit warning last week that reduced Carter Holt's full year forecast to $200 million, down a third on an original $300 million figure, the directors have now decided the risks outweigh the benefits of going along for the ride with Mr Hart.
The directors backed their view with a new report by advisers Grant Samuel that valued Carter Holt at $2.43 to $2.90 a share. This compares with an earlier report that valued Carter Holt at $2.55 to $2.95 a share.
"The independent directors have not been able to get the same level of comfort and assurance about the quality of the management's forecasts," Mr McDonald told National Radio.
"We think there is now a significant degree of uncertainty in that area. We couldn't get sufficient information.
"The bottom line for shareholders is firstly, there is still good value upside in the company, but the balance of risk has shifted quite heavily now."
Some big investors appear willing to shoulder that risk, however.
Brook Asset Management director Simon Botherway says the company is at the bottom of the cycle and management is painting an excessively bleak picture of its outlook.
"I think institutions will look through this and take their own view as to what the likely earnings potential of the company are," he told National Radio.
"(Mr Hart) has a far greater chance of succeeding than he did yesterday, and there will probably be a flood of acceptances at the retail level.
"Whether or not institutions are swayed by this remains to be seen."
Shares in Carter Holt closed yesterday at $2.50.
- NZPA
