There’s been a lot of talk about big nasty private equity buyers and how they are buying up Australia.
There’s also been a lot of chat about the activities of hedge funds and how they are allegedly de-stabilising Australian business and markets.
Most of this talk has been silly and alarmist because if you look at the number of successful bids (a few) and a number of walk aways (quite a few), there’s no flood of buyout money overwhelming Australian corporates.
And what we have found is that led by Sydney-based fundie, Perpetual, a few funds managers (and maybe a hedge fund or two) have opposed some of these bids and takeover deals quite actively, to the point of missing out on billions of dollars of profits for shareholders and investors.
Here’s a form book, with Rebel Sport the big one today.
Rebel Sport: D-Day today in Sydney for the bid from Archer Capital of $4.60 a share. Controlling shareholder Gerry Harvey’s Harvey Norman has said ‘yes’ but Perpetual, Paradice and Invesco have 25% of the company between them and are threatening to vote to reject the offer. The offer is being done through a scheme of arrangement. Unchanged at $4.25 yesterday and everyone wary and silent.
Flight Centre: $17.20-a-share privatisation bid by founders and Pacific Equity partners defeated by 12.45% shareholder Lazard saying ‘no’ in Brisbane a couple of weeks ago to the $17.20 offer.. Shares yesterday $14.67, down just one cent in yesterday’s sell down that saw the market fall by more than 100 points. The buyout group has to wait six months so anything can happen.
Pacifica: Bosch offered $2.20 with board support but only got 75% as Investors Mutual and Lazard refused to accept. Shares yesterday rose 3c to $1.98. The board had previously said no to a suggested $2.40 a share bid earlier in 2006. Shareholders big losers on that basis, no matter what the two instos say.
Chiquita Brands: Frank Costa, Coles’ fruit and veggie supplier, and Timbercorp offered 74.5c-a-share for the banana and berry farmer and marketer but only got 80% as fund manager, MMC Capital refused to accept for its 14.6%. Shares yesterday 74, down 2c, and bidders have called an EGM of shareholders to remove an independent director for this Friday.
Qantas: APA (AKA Macquarie, Allco, Allco Equity, Texas Pacific and friends) have offered $5.60 but down to $5.45 after the 15c dividend. Stock down 5c to $5.04 yesterday as UBS and Balanced Equity still either say no or refuse to commit one way or the other. Maple Brown Abbott now said to have sold down its 4 per cent stake by 50 per cent or more. Bid closes on April 3 and just on 51 million shares traded yesterday to take the total since Monday to 170 million. Can all shareholders keep the 15c and get the $5.60? UBS and Balanced reportedly said no to at least three offers from hedge founds for their shares at $5.60.
APN News & Media: the founding O’Reilly family, Providence Equity Partners and The Carlyle Group have offered $6.10. It’s the second attempt, the previous was rejected by the board and this time there’s a board tick. But market doesn’t believe the deal will fly. Shares down to $5.80 yesterday on low turnover. Perpetual has said it will probably vote its 14.5% stake against the bid at the meeting in late May.
Coles: Board rejected $15.25 from KKR and its gang last October, which was the second offer, the first was an ‘indicative’ bid at $14.80. Shares closed at$15.52 yesterday. More media stories today about profit problems as the retailer. The board now voluntarily selling the whole company after profit downgrade last month. When the company reports interim earnings shortly we will find that it hasn’t even been able to match the 7.2 per cent growth in retail sales that the ABS said happened in retailing from January last year to January this year.
Rinker: Mexican concrete giant Cemex offering $17 in a hostile bid but board and independent expert have both dismissed it and put the minimum reasonable price around at more than $20. It doesn’t have a chance, but what will the slide in the US housing industry and the subprime mortgage crisis do? RIN down 50c to $18.55 yesterday on 4.7 million. The US problems are making some holders nervy. Perpetual has rejected the Cemex offer so until that changes, bid will die.
E*Trade: The ANZ Bank has offered $4.05 a share for the 65.8 per cent it doesn’t own of the online broker: That values the company at $268 million but Calendonian Investments has lifted its stake to around 12 per cent and is opposed to the ANZ price. E*Trade of the US sold shares into the market rather than the ANZ offer at $4.18. Another sticky situation that can only be resolved either of two ways, a higher price or the ANZ walks. E*Trade closed at $4.13 down 2c.
The Warehouse Group: NZ’s biggest retailer. A buyout offer from founder Stephen Trindall and Pacific Equity Partners was called off after rivals Foodstuffs and then Woolworths bought 10 per cent each last year to try and frustrate the deal. They did. Both have now lodged clearances for bids for the company which last Friday reported reasonable profits. The shares closed at $A5.95 in Australia, down 9c, yesterday.
