FPA to delist after takeover

CLAIRE ROGERS
Last updated 07:20 07/11/2012

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Kiwi whiteware darling Fisher & Paykel Appliances (FPA) will disappear from the NZX but local investors could still get a slice of the company if Haier relists its finance arm, an analyst says.

Haier said yesterday it had secured almost 93 per cent of FPA shares, triggering its right to buy the rest of the company for its $1.28-a-share offer price and delist it from the NZX.

Morningstar analyst Nachi Moghe said Haier would probably look to divest FPA's successful finance business, which supplies the Farmers Card and Q Card consumer credit cards, as it was outside its expertise.

"They might look at a trade sale but it's most likely they will look to relist. Investors might still get a chance to invest in the finance business."

The finance business had outperformed the appliance arm since the global financial crisis, he said. It had higher margins and a steady profit stream, and reported a normalised profit, before interest and tax, of $37.8 million, up 8.9 per cent, for the year ending March 31.

In contrast, F&P's appliance business reported a trading profit of $11.3m, before interest and tax, down 52 per cent.

Brokers had estimated Haier would get $280m for the finance business.

Forsyth Barr research analyst Andrew Harvey-Green said Haier had not ruled out selling the finance arm but that did not mean it would.

"It's definitely not a certainty, but they could sell."

Another potential scenario is Haier retaining the business so it could set up a similar company in China to help Chinese consumers to buy Haier whiteware products.

FPA had effectively had the finance business on the market for the past three or four years but, obviously, did not get any appropriate offers, he said.

"There aren't that many buyers for a large consumer finance business so it won't be an easy sell."

The takeover of FPA narrowed investors' choices.

"It's always sad to see a company go that's been on the market for a very long [time] and has a name like Fisher & Paykel."

FPA investors would receive about $740m cash from Haier, although not all would come to Kiwi investors.

Moghe said the Fonterra shareholders' fund could be an attractive prospect for cashed-up former FPA investors.

He expected Haier would continue the trend of moving manufacturing overseas.

"Research will be here for some time at least, but manufacturing will increasingly go offshore. They'll probably close some plants in Italy as well and move to low-cost regions."

The Chinese whiteware giant first offered $1.20 a share in September but increased that to $1.28 last month after independent adviser Grant Samuel valued FPA at between $1.28 and $1.57 a share. The sweeter offer won over FPA's independent directors and prompted several institutional investors, including ACC and AMP, to sell - taking Haier's stake over 50 per cent, its minimum target.

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Haier said it looked forward to working with FPA and thanked its independent board for the guidance it had given shareholders, but declined to comment further.

The company has previously promised no jobs would go as a direct result of the deal, but indicated it will stick with FPA's strategic plan to move another 25 per cent of manufacturing to low-cost-labour countries such as Mexico and Thailand - potentially affecting some of FPA's 1100 New Zealand employees. FPA has about 950 workers at its Auckland plant producing refrigeration components, and 150 in its Dunedin-based research and development centre.

Haier president Liang Haishan has said Haier wanted to see New Zealand become a global centre of excellence for the wider group's research and development. Fairfax NZ

- © Fairfax NZ News

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