Takeover activity on the rise

Last updated 14:04 31/01/2013

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The Takeovers Panel says the last three months have been its busiest period since the global financial crisis.

At a Parliamentary commerce select committee meeting today, the panel's chief executive Margaret Bearsley and chairman David Jones said six takeover bids were underway at present.

Bearsley said takeover activity had increased significantly in the last six months, after a relatively quiet two years.

"The lowest we had in one year was only four takeovers that we were regulating, although you must recall that we regulate not only takeovers, but also transactions that require shareholder approval," she said.

The panel, which was brought in to instil more investor confidence into the capital markets, regulates takeovers of listed companies or companies with more than 50 shareholders.

Jones said: "People look to our capital markets to see if we have rules in place which at least are consistent with other jurisdictions."

Made up of 11 market participants plus legal staff, the panel is largely funded by the Government but draws some income from "third party" administration and hearing costs.

Labour MP Clayton Cosgrove quizzed the panel over a risk it had identified of losing its legal staff if it did not have sufficient budget to meet market rates.

Jones said the risk had been noted, but the panel did not wish to "cry wolf" to the minister "because we manage".

National MP Sam Lotu-Iiga said that given the circumstances, the panel had done well to stay in surplus, on average by about $50,000 over the last five years.

That was despite being sued in 2010/2011, when the Marlborough Lines company sought a judicial review after being denied its takeover of Horizon Energy.

Bearsley stressed the panel was busy even when takeovers were not waiting in the wings.

Much of its work stemmed from rights issues, which could trigger a shareholder meeting if a substantial shareholder wanted to lift its stake.

Takeover-wise, the panel's busiest year was just before the global financial crisis in 2007/2008, when many distressed sales took place. In that year, 24 takeover offers were handled.

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- BusinessDay.co.nz

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