Electricity distributor Horizon Energy is urging its majority shareholder to state its intentions after the board recommended shareholders reject a partial takeover made by Marlborough Lines.

Horizon chairman Rob Tait said this morning that minority shareholders need to know whether Eastern Bay Energy Trust plans to sell some of its 77% stake, which would be required for the takeover to be successful.

He said that if Eastern Bay accepts the $3.96-a-share offer then minorities should as well, despite the Horizon board viewing the offer price as not representing adequate value.

This is because any minority shareholders holding shares once control passes to Marlborough Lines will face reduced liquidity and potentially a lower share price. They would also lose imputation credits on any dividends paid.

Should Eastern Bay reject Marlborough’s bid then the offer will fail anyway.

Marlborough Lines is seeking 51% of Horizon. Its offer values the company at $99 million, which falls at the bottom end of an independent advisors report made public this morning.

Simmons Corporate Finance values Horizon shares at between $3.96 and $4.68.

The report noted that Marlborough Lines was not currently proposing to make any material changes in respect of the company’s business activities.

Mr Tait said the takeover offer was of inadequate value of Horizon’s shareholders and “fails to appreciate the true value of the company’s overall business and the growth strategies.”

“If the offer is accepted … shareholders will be left with significantly smaller and, potentially less liquid, holdings, which may trade at a lower price in the future.”

Once Marlborough Lines had control of Horizon, future offers for the remaining shares were less likely, he said.

Mr Tait said while the company had not gone out to solicit any competing bids, there was every chance other parties might consider making an offer.

An open, contestable process could bring higher value to shareholders, he said.

Horizon is an electricity distribution business conveying electricity to customers in the Eastern Bay of Plenty region.

The company distributes electricity to over 24,400 residential commercial and industrial customers. It also has a contracting division.