The proposed offer for The Warehouse Group by Australian investment company Adamantem and founder Sir Stephen Tindall has got the public worked up about the potential for a third player to enter the supermarket space. Photo / Jason Oxenham
The proposed offer for The Warehouse Group by Australian investment company Adamantem and founder Sir Stephen Tindall has got the public worked up about the potential for a third player to enter the supermarket space. Photo / Jason Oxenham
The proposed offer for The Warehouse Group by Australian investment company Adamantem and founder Sir Stephen Tindall has got the public worked up about the potential for a third player to enter the supermarket space.
But there is a lot more work to be done to even getthe deal over the line. Stock Takes understands the big sticking point is the Norman Family. David and Anne Norman through their company James Pascoe Ltd own 19.9% of The Warehouse.
A vote on the non-binding offer would require the Normans to vote in favour to get it over the line to reach the 75% threshold. That’s because Tindall, who alongside the Tindall Foundation has just under 50% of the shares won’t be included in that vote.
And if it came to a hostile takeover situation, rather than going through the proposed scheme of arrangement, then 90% of shareholders would need to sell their shares into the deal meaning it could also be blocked by the Normans holding out.
In response to questions about what they think of the offer David Norman told Stock Takes he was currently in the UK and was watching the Warehouse development with interest.
“We are not prepared to offer any other comment other than WHS is fundamentally a great company.”
Given how much the deal hinges on getting the Normans on board, it seems surprising that Tindall and Adamantem didn’t do so before approaching The Warehouse board.
Tindall and Adamantem have both so far declined requests for comment on the offer so far, so it’s difficult to know what their thinking is but they must believe they can convince the Normans to sell.
The proposed offer of $1.50-$1.70 is well below what the Normans are likely to have paid to buy shares in The Warehouse. They first appeared on The Warehouse’s share register in 2014 when shares were trading at well over $3. What would be the incentive to sell at a lower share price?
Perhaps if the Normans were invited to be part of the new structure it could sweeten the deal and get them over the line? The Normans have plenty of retail experience - they also own Farmers, Pascoes and Whitcoulls.
Long process
What is clear is that the deal is not going to be done quickly. Adamantem will now be undertaking due diligence on The Warehouse so that it can confirm its interest and firm up the offer price.
If it is happy to go ahead then it will negotiate a scheme implementation agreement with the board, firm up support from major shareholders and prepare a notice of meeting.
The parties would then announce the details of the scheme to the market and engage an independent adviser to give a view on the offer price. Approval is required by the Takeovers Panel and the NZX while the High Court must approve the scheme booklet ahead of a shareholders meeting.
Schemes of arrangement require the consent of the boards of the companies involved as well as approval from the court and shareholders.
If all goes smoothly it’s likely the vote won’t happen until early to mid-September.
As of lunchtime yesterday shares in The Warehouse had surged to $1.44, up from Friday’s closing price of $1.16 - before the offer was made public. For those who don’t want to wait or believe the deal won’t get over the line, there’s the ability to sell now for not much less than the bottom point of the offer price.
If Adamantem’s name is anything to go by they could drive a hard bargain. Adamantem is latin for “the hardest steel, diamond, that which is lasting”.
ANZ bond trading scandal deepens
ANZ Group chief executive Shayne Elliot. Photo / Dean Purcell.
ANZ executives, including CEO Shayne Elliott, are under heavy scrutiny as fallout continues from a bond trading scandal and multiple investigations into workplace culture at the bank’s trading division in Sydney.
Elliott yesterday revealed the bank’s board is considering taking action against senior executives, including himself.
“We have been very clear with our people. Where we find any evidence of wrongdoing, those involved will be held accountable and action will be taken. The board will also lead a process to ensure consequences will be applied to senior executives, both past and present, including myself, where appropriate,” he said.
ANZ had recently terminated and suspended “several employees” in its trading team and made management changes in its Sydney dealing room after investigating allegations of inappropriate conduct and behaviour.
“While the external investigation remains ongoing, there have been employment outcomes for several employees including suspension, termination and a formal warning.”
“Management changes in the Sydney dealing room have also been made,” ANZ added.
The Australian Securities & Investments Commission is investigating whether traders at the bank manipulated the sale of Government bonds last year to create more favourable terms for the bank at the expense of taxpayers due to higher borrowing costs.
ANZ says it is cooperating with ASIC’s investigation, which is expected to take some months.
The bank is also facing scrutiny over inflating bond turnover numbers for fiscal 2023. Elliott said he had “personally apologised” to the head of the Australian Office of Financial Management for the bank’s failures in this area.
Meanwhile, the scandal engulfing ANZ is attracting interest in the local bond market.
The regulator is still considering two of those complaints while deciding not to investigate four, including one focusing on the sale of $3.5 billion of Government bonds in 2022.
Richard Prebble’s retirement payout
Richard Prebble. Photo / The Listener
The majority of Mainfreight’s shareholders voted in favour of a $120,000 retirement payout to Richard Prebble but there was some opposition. Just over 66% of investors voted for the motion while 33.8% were against it and a small group of shareholders abstained from the vote.
The former Labour Party minister and Act Party leader has been on the board of Mainfreight since 1996 when it listed on the stock exchange.
He gave notice of his plans to retire from the board in 2024 at the 2023 annual meeting.
Chairman Bruce Plested thanked Prebble for his contribution.
“We would like to take this opportunity to acknowledge Richard Prebble, our board member since listing on the NZX in 1996, for his wonderful contribution to our company. Richard’s insights and deep intuitive understanding of our business and culture have been invaluable.”
The $120,000 payout is equivalent to one year’s director’s fees.
Genesis downgraded
Forsyth Barr has downgraded its outlook for Genesis Energy. Photo / Doug Sherring
Forsyth Barr has downgraded its outlook for Genesis Energy due to what it says is an increasingly uncertain gas outlook.
The broker now rates Genesis as “neutral” from “outperform”.
”Higher gas costs and gas generation portfolio restrictions has resulted in a lower and more uncertain earnings forecast from full year 2026 onwards,” it said.
Genesis Energy runs three coal and gas-fired Rankine units at Huntly, which back up the system when hydro power is constrained.
Forsyth Barr said despite Genesis now operating its third Rankine unit, it does not appear to be in a position to take advantage of the situation as much as previously thought.
”Whilst Genesis retains its attractive dividend yield, it also faces the greatest challenges and most uncertainty in the sector.
”It said the outlook is increasingly uncertain with the implication of higher gas costs a particular concern New Zealand is short gas, with demand exceeding supply and no solution in sight.
Spot gas prices are at record levels, and have traded above $38 per gigajoule – up 400% from more than a year ago.
”Whilst Genesis’s 46% stake in Kupe provides some protection, 64% of its second half 2024 gas was supplied by external parties (Beach Energy 42%, others 22%),” Forsyth Barr said in its report.
Limited gas supply has also forced Genesis Energy’s Unit 5 at Huntly – which offers baseload power - at lower levels, reducing its ability to “flex” higher during peak demand periods.
”In addition, as Kupe volumes decline, Genesis has to source more external gas from the tight gas market.”The financial impact of these issues are greater than previously envisaged, such that we have not lifted our 2025 ebitdaf forecast despite current market conditions requiring the third Rankine coal unit to operate,” the broker said.
-additional reporting Jamie Gray and Duncan Bridgeman
