Confidence in new Mercer boss prompts stake grab
Milford Asset Management has snatched a 5.2 per cent stake in stainless steel fabricator Mercer Group saying the firm is on a stronger footing under chief executive Rodger Shepherd.
Milford, associated with influential investment manager Brian Gaynor, paid around $2.3 million for the stake from the statutory managers in charge of assets once owned by deceased Timaru businessman Allan Hubbard.
Gaynor confirmed that Milford Asset Management paid 16 cents a share for 14.3 million shares in a transaction with First NZ Capital, which had been touch with the statutory managers about helping manage the sale of the stake.
The management of Mercer Group, in which Christchurch businessman Humphry Rolleston is an influential shareholder, was seen as having moved further away from its previous incarnation as Broadway Industries, Gaynor said.
Mercer shares yesterday afternoon closed 1 cent weaker at 24c, having traded in the 12c to 25c range since June.
Grant Thornton, in a substantial shareholder notice, said it had sold a total of 31.3 million shares or 11.3 per cent of the company, with no further Mercer shares held on behalf of Hubbard Management Funds. The shares were sold on January 21, with the transactions due to settle today.
Gaynor said Milford Asset Management had talked to Shepherd about plans for the company. There were a number of reasons for the purchase, he added.
He noted that prior to Hubbard's death he had bought a 16 per cent stake in a Salvus investment trust from the Timaru business and had done very well out of an eventual sale.
Mercer had interesting products in both stainless products for the dairy industry and housing interiors markets, which were seeing growth.
"These kind of shareholdings don't come up very often . . . we knew that the receiver would have to sell the shares at some stage, so we were interested.
"The company, it used to be Broadway, it was a very sleepy company. But it's changed a lot in recent years. Rodger Shepherd's now running it and he's got a very clear plan of where he wants to take the company, much more focused than it ever was in the past.
"He owns about 8 per cent of the company, he's motivated . . . you look for changes and the change is Rodger."
Mercer would not be an instant turnaround but a longer term investment, Gaynor said.
The Mercer stake bought by Milford was split between the Milford Active Growth Wholesale Fund and the Milford Dynamic Wholesale Fund.
Grant Thornton did not immediately respond to a request for comment.