S8 untroubled by move on Gullivers

Australian hedge fund manager Monterrey Investment Management has bought a blocking stake in takeover target Gullivers Travel Group but ASX-listed bidder S8 is unfazed by the move.

S8 managing director Chris Scott said the purchase by Monterrey looked like a clear play for a special 5c dividend Gullivers was to pay before the takeover rather than speculation on a higher offer.

"That [speculation] wouldn't make any sense at all," Scott said.

"We don't need to go to compulsory acquisition in New Zealand. Once we get 51 per cent, we effectively control the company."

Monterrey has bought a 12.1 per cent stake in Gullivers for $28.5 million, acquired between May 29 and last Thursday. The stake is enough to stop S8 reaching 90 per cent of Gullivers and compulsorily acquiring the rest of the company.

Monterrey - formed in 2001 - describes itself as one of Asia's leading investment managers, specialising in "opportunistic hedge funds".

Hedge funds are essentially aggressive investment funds that can make short-term, highly leveraged investments in an attempt to make large profits.

Melbourne-based Monterrey would not comment yesterday.

First NZ Capital research analyst Jason Familton said Monterrey was probably trying to take advantage of a special cash dividend of 5c a share rather than stop the takeover going through.

Travel and property company S8 is offering $2.35 in cash a share, conditional on 50 per cent acceptance. The takeover values Gullivers at $235 million and the special dividend would be paid once the bid went unconditional.

Gullivers managing director Andrew Bagnall has agreed to sell his 26.82 per cent stake and will be invited to join the S8 board after the takeover.

Familton said the potential payout of a special dividend was a typical opportunity targeted by hedge funds.

The fact that Gullivers shares were trading at the offer price of $2.35 suggested the market considered a higher offer was unlikely.