Haier likely to get all of F&P at $1.28: AMP

Haier director Liang Haishan during an Auckland briefing

Haier's raised offer to Fisher & Paykel Appliances shareholders should be high enough to snare the whole company, one fund manager says.

Today, the Chinese whiteware giant announced it had raised its offer eight cents to $1.28 and locked-in a further 14.1% of the company with three major investors, one of which was AMP Capital New Zealand.

Shares (NZX: FPA) rose almost 2.5% on trade of more than 20 million shares, or almost 3% of the company, indicating investors don't see another bidder coming to the party.

AMP's deputy head of equities, John Phipps, told NBR ONLINE the offer price is fair and he felt Haier should get the whole company at that price.

"I'd be surprised if they don't," he says.

The increased offer is at the bottom end of the Grant Samuel independent valuation report for F&P shareholders.

But Mr Phipps says Grant Samuel's assumptions were "a little aggressive" compared to its own.

"If people do their work well and risk-adjust properly, I can't see why you wouldn't sell."

While AMP has not locked-in its entire shareholding, because of "structural mandates", it does intend to sell its whole stake, he says.

Mr Phipps says AMP bought into the company a few years ago, in the high 50 cent range, after a wave of new F&P management was brought in under ceo Stuart Broadhurst.

As to what will happen to F&P under Haier?

"It's speculation, mate – there's not a lot of value in that.

"We're selling into the company, it's up to those guys."

Bottom of the range

Earlier this afternoon, Chinese whiteware giant Haier increased its offer to Fisher & Paykel shareholders by eight cents, to $1.28 – at the bottom end of an independent valuation report that put the shares in a range of between $1.28 and $1.57.

Three major F&P shareholders, holding 14.1% of the company, have now agreed to sell their stake, giving Haier more than 50% of the company.

Fisher & Paykel's independent directors now say shareholders should accept the offer, reversing their earlier recommendation.

In a release to the stock exchange this afternoon, F&P chairman Keith Turner says the increased offer is within independent adviser Grant Samuel's valuation range.

At the increased offer price Haier – already a 20% shareholder – has secured more than 50% of the company, Mr Turner says, after acceptances of the increased offer by "major shareholders" with a 14.1% stake and an initial lock-up agreement for 17.5% with Australian fund manager Allan Gray.

“Haier will achieve its minimum acceptance condition of more than 50% of the voting rights of FPA and will gain a controlling interest in the company when the offer becomes unconditional."

The increased offer won approval from Accident Compensation Corp, which holds 7.2% of the company, AMP Capital Investors (4.5%) and Harbour Asset Management (2.4%), which will get $66.6 million, $41.8 million and $22.7 million for their shares, respectively.

Earlier this week, AMP said Haier's $1.20 offer was too low.

'This allows our offer to move forward'

The increased offer represents a 71 percent premium over F&P Appliances' stock price of 75 cents, before Haier disclosed its interest.

"While we differ with the valuation provided by the independent adviser, we are pleased to indicate our intention to provide an increased offer price to within the valuation range," said Liang Haishan, Haier New Zealand Investment Holding chairman. "We feel this allows our offer to move forward on a positive basis."

Only last week, Mr Liang called Grant Samuel's valuation "overly optimistic".

F&P directors and senior officers who hold shares have all confirmed they will accept the increased offer.

"Directors acknowledge that some market commentators believe that should Haier’s offer close without Haier having reached 90% acceptances, FPA shares will trade lower than the increased offer price of $1.28," Dr Turner says.

“Shareholders should consider Haier’s increased offer in the context of their own circumstances and should consult their professional advisors”.

Haier's offer closes on November 6.

A NZX trading halt of F&P shares (NZX: FPA) – imposed earlier today before the Haier announcement - was lifted soon after 2pm.

F&P Appliances five-year NZX performance. S&P Capital IQ; click to zoom.


10.40am: Fisher & Paykel Appliances shares have been halted pending an announcement after an independent evaluation deemed the takeover offer from 20% owner Haier of China was too low.

Shares of the Auckland-based manufacturer of fridges, stoves and dishwashers last traded at $1.235, above Haier's $1.20-a-share offer for the rest of the company. 

The stock has soared 239% this year, mostly on the back of Haier's proposal, which was well above the trading price at the time.

The independent valuation report put the shares in a range of between $1.28 and $1.57.

Investors such as AMP Capital and Tower said they wouldn't accept the Haier offer though the Chinese firm has already secured agreement from Allan Gray Australia to sell its 17.46% holding into the offer, giving it a total of about 37%.

Haier effectively rescued F&P Appliances in 2009 when it acquired a 20% stake as part of a capital raising that let the company refinance its debt. The local manufacturer got distribution into China as a result of the deal and the ability to further licence its technology.

– additional reporting from BusinessDesk

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37 Comments & Questions

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Where is everybody's money? $1.35 or $1.40?

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$1.30.

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$1.40 would assure them of a takeover. Anything above $1.28 would presumably get board approval.

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If management had not stuffed the company up F & P would never have been in this position

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Either works for me, 1.40 is perfect.

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Another appliance manufacturer will swoop in at the last second with a higher bid.

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Heres hoping Haier pulls out and all the speculators get their wallets kicked

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Who in the share market isn't a speculator??

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Love it when we get postings like this - envy gets you no way!

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Why on earth would you want NZ investors, and funds with NZ retirement savings in it to be punished?

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Because he is a loser?

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Wow, it is funny how bullish people can get. At the end of 2011 FPA was so unloved the share price got down to 35 cps. Until the Haier offer the price had sat at or under 60cps for the last three years.

If all you can think about is whether they will lift their offer to 1.30 or 1.40 it means you don't give a tinkers about the company.

All I can say is thank you Haier for allowing me to get the money back I invested a few years ago, plus a little more.

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Correct. Where were all the NZ patriots when FPA was 35c?

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They were all busy buying holiday homes in Fiji and Gold Coast.

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I don't how true the rumour is -- but I hear that Fisher & Paykel will be morphed into Wong & Chang.

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Not quite true. In deference to the two founders, the likely name will be

Feng & Ping

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Your sources are wrong. In keeping with a renewed effort to be customer-foussed, friendly and cheerful the company will be called Hi Ya

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I was there when they got down to 35 cent. I am glad I got some when they were 39 cent. Sometime it takes a bit of guts and willingness to loose some sleeps.

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Where's the $3.31 offer we wanted?

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New Chinese owners, but loss of NZ brand loyalty and goodwill. When the Chinese have stripped out the technology they want to leverage off, the F&P name will disappear.

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No question about it. Another NZ company and brand will be no more.

Bye bye, F&P, nice knowing you.

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And why is that do you think?

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when does the trial start for NZ biggest loser? how on earth can a fully bonafied NZ market leading, globally aspiring business destroy itself and billions of dollars of shareholders funds, not to mention the credibility of NZ business people, all in the matter of a few years? Sure, the strategic initiatives have been off beam for years, designing sophisticated nonsense that couldnt be commercialised, but this is akin to Enron going down! Gary and John Boy need to explain themselves'.

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Shame to see a great NZ company go the way most have gone.

Does anyone think that moving factories to Mexico might have been a cause of its downfall? I don't know but the thought crossed my mind. Did that move work for F & P?

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That worked well. What did not work was the sub-prime matter in states... then the problems with the global financial.

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Soon to be one less listing on the uninspiring NZX

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Hopefully we might see some cash following into other NZX listings from investors re-investing the F&P earning back into the NZX.

But due to the lack of confidence in the markets and lack of quality NZX listings it'll probably sit in a bank and end up being lent out for the only thing a new post-recession breed of risk-adverse banks will lend for... property. Further inflating an already over valued property market. Wasn't it property that got us there in the first place.

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Oh well thats my mind made up for sure definitely all Bosch Appliances for the new house!

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Yeah, right. More likely, secondhand bought through Trade and Exchange of Trademe.

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had 3 bad boshe appliances in 1 year...trust me man....you dont need the stress fighting with them

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Looking at that graph of the share price performance over the last ~5 years is just sickening. I imagine that the old Paykel family members will be turning in their graves at today's announcement and what has happened to their company that was once a very fine New Zealand business with a long history of stability and success.

Will anyone write a book or undertake a study into how the decline and fall of Fisher and Paykel Appliances came about to see if there is anything that NZ Inc can learn from it? I somehow doubt it. I guess we'll just have to notch this one up as another loss to the New Zealand disease. What's that? Managerial and business mediocrity writ large.

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Where's KKR when you need them...

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Live a Haier Life!

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Interesting comments by Presidential candidate Mitt Romney in the last presidential forum. on the Chinese way of doing business .It seems a shame to me that F&P would want to sell at a low share price.?

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Total management stuff up at its best.

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Globalization destroyed F&P! The factories should have been moved to China years.

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Umm, no it didn't. Management incompetence that led to a back-breaking debt burden that couldn't be serviced let alone paid off did that quite nicely. In recessions weak companies, at the mercy of their lenders, often fail and are liquidated or are swallowed up by stronger companies flush with cash. That is capitalism at work.

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