Rank Group buying Carter Holt shares on the open market

Graeme Hart's Rank Group has been buying Carter Holt Harvey shares on-market as well as via a formal offer to shareholders, though the strategy has not got it far.

Rank's $2.50-a-share offer for New Zealand's largest forestry company is set to close on Thursday and it has so far disclosed it has 51.15 per cent of Carter Holt.

That means it has made little progress beyond the 50.5 per cent holding it got from US-based International Paper for $1.65 billion.

Bidders can buy shares on the sharemarket during a takeover offer at the same price as the offer if they have made a full cash offer and it is unconditional. They have to notify the Takeovers Panel.

The panel had been notified by letter from Rank, spokesman Kerry Morrell said.

Rank has control of Carter Holt, care of the IP stake, but it is not known what level of shareholding Hart is ultimately seeking. Rank has to get to 90 per cent before it can compulsorily acquire remaining shares and delist the company, if that is its goal.

Hart has given no interviews since launching the $3.3 billion bid for all of Carter Holt, leaving investors guessing about his ownership intentions and strategy for the business.

The buying on-market, albeit in small amounts, suggest he wants a bigger shareholding than IP was happy with. One hundred per cent ownership of companies gives the owner access to cash flow and provides the privacy Hart is noted for.

Rank's broker, First NZ Capital, has been granted a waiver from the NZX from complying with liquidity requirements if purchases of Carter Holt stock for Rank cause it to be in breach of NZX capital adequacy requirements.

The waiver is valid until this Thursday, when the bid closes, and any breach would be for only three days as Rank is settling its purchases of Carter Holt shares three days after acceptance.

Generally, companies must give two weeks' notice if they plan to extend an offer and Rank has not done that.

Acceptance levels in the last days before an offer closes are unpredictable.

Institutional shareholders generally make their minds up at the end of a bid period, while retail investors typically follow the advice of independent directors, which in this case is to reject the offer.

- NZPA