Tower sells stake in Fisher & Paykel

Last updated 15:48 02/11/2012

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Tower Investments says it will reluctantly sell its 3.7 per cent stake in Fisher & Paykel Appliances to Haier, to avoid becoming a substantial minority shareholder in a company controlled by the Chinese whiteware giant. 

Tower Investments chief executive Sam Stubbs has been a vocal critic of Haier's offers for FPA shares.

Haier initially offered $1.20 a share, which Stubbs described as ''a steal'', but upped its price to $1.28 a share after independent adviser Grant Samuel valued FPA at between $1.28 and $1.57 a share. 

Haier had 72.37 per cent of issued FPA shares as of this afternoon. Shareholders have until 5pm next Tuesday to accept the offer, unless it is extended. 

Stubbs said it was still disappointed with the price of $1.28, but thought Haier would get enough shares to make it undesirable for Tower to remain on as a substantial minority shareholder. 

''We are reluctantly accepting. [$1.28] was just inside the independent valuation range and just inside our range of $1.25 to $1.60.''

''But as a general rule we do not like to be a substantial minority shareholder unless we have a considerable amount of influence and we would not in this case. This would be a company very much controlled by Haier.

The lack of liquidity [in shares] and the uncertainty about the long-term value accreting to minority shareholders would lead us to not want to be there.''

Tower had bought the shares for between 35c and 50c, so it had been a fantastic earner for its Kiwisaver clients and investors, he said. 

''But at the end of the day it's not all about that, it's about what is a fair price to pay for ownership of the company and this is right down the bottom end of expectations of a fair price.''

Stubbs said he could not pick whether Haier would get over 90 per cent, which would allow it to compulsorily acquire the remaining shares. 

''The party isn't over yet. If Fisher & Paykel is delisted it would be sad from a New Zealand investor's point of view because it's the loss of an iconic Kiwi company just as we're beginning to see the benefits of its turnaround.

''But that's why we have capital markets and there will be other things to invest in.''

The extra 8 cents Haier had offered in upping its price from $1.20 equated to $56 million worth of extra value to Kiwi investors, he said.

''So the process of getting Haier to make a higher bid, pardon the pun, has been worth it.''  

FPA shares were trading at $1.275 on the NZX today, valuing the company at $923.4 million.

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- Fairfax Media

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