Scott warns shareholders of low-ball bid

03:24, Feb 20 2012

Dunedin-based automated machine maker Scott Technology is advising shareholders to reject a low-ball unsolicited share offer from Zero Commission NZ.

In a move reminiscent of infamous businessman Bernard Whimp, Zero Commission is offering to buyout investors with stakes of 1300 shares or less for $1.50 apiece, almost 10 per cent under Scott's current $1.66 share price.

Scott Technologies has recommended shareholders seek independent financial or legal advice if they're considering the offer.

It recommends that small investors scale reject the offer.

''Shareholders are under no obligation to accept the offer or to take any action in respect of it,'' said chairman Stuart McLauchlan and managing director Chris Hopkins in a joint statement.

The Financial Markets Authority last year banned low-ball offers after controversial figure and bankrupt Bernard Whimp snapped up shares in several major New Zealand companies for as much a third less than their trading value by sending letters to shareholders, warning that the price of their securities could fall dramatically.

Zero Commission, which also targets shareholders in a similar fashion, has previously defended its business model, saying the offer comes at a smaller discount to Whimp's and smaller investors are likely to come out even once brokerage fees are taken into account.

Additionally, it says it has liaised with the FMA on concerns surrounding its offers, and was complying with the recommendations from the financial market watchdog, although it did not specify what these were.

Zero Commission has already made several low-ball offers to minority shareholders, having previously launched bids for Tenon, King Country Energy and CDL Investments.