F&P Appliances takeover – China's Haier names its price
"I expect Haier will be successful because NZ investors have a long and sad history of taking the quick buck instead of being patient and wait for the long-term gains."
Featured commentHaier is offering $1.20 a share for the 80% of F&P Appliances it does not already own, the Chinese company said in a statement last night.
Allan Gray Australia Pty, which is the largest shareholder after Haier and holds 17.46% of Fisher & Paykel Appliances shares, has entered into an irrevocable agreement to accept the proposed offer, Haier says. The Gray sale gives Haier control of 37% of F&P.
Independent directors have also agreed to the sale, albeit with conditions, including that product development remain in NZ.
FP Appliances chairman Keith Turner says an independent expert had been appointed to review the proposed offer. "We recommend shareholders don’t do anything," until the review is complete, the chairman says.
F&P Appliances shares closed yesterday at $1.03 [NZX:FPA], valuing the company at $746 million according to S&P Capital IQ. Haier's $1.20/share offer values the company at $869 million, meaning Haier would have to pay around $695 million for the oustanding shares.
The stock jumped 40% to a four-year high of $1.30 on Monday as Haier first hinted at its intentions on Monday morning.
Haier's $1.20 offer, and Monday's gain, are impressive against F&P Appliance's 12-month NZX performance; less so in the context of its five-year peformance, which has seen shares hit a high of $3.72 (see charts right). The company has not paid a dividend since 2009.
Under the offer, Fisher & Paykel Appliances would remain as stand-alone company led by local management
Fisher & Paykel Appliances was formally issued a Takeover Notice yesterday by Haier New Zealand Investment Holding Company Ltd (Haier), a subsidiary of Haier Group and made public yesterday evening shortly before 7pm.
The proposed offer will be subject to general conditions, including regulatory conditions and a minimum acceptance condition that Haier holds more than 50% of Fisher & Paykel Appliances shares, the company's statement says.
“We also wish to retain the existing Fisher & Paykel Appliances development base in New Zealand and to support the future growth of Fisher & Paykel Appliances’ product development capabilities,” Liang Haishan, director of Haier and president of Haier White Goods Group says.
Haier says the existing ratio of New Zealand or Australian resident independent directors on the Fisher & Paykel Appliances board be maintained for at least two years.
Analysts say Haier (which has sales of around $US23 billion to F&P's $1 billioon) is buying the iconic NZ company for its intellectual property. Last night, Haier said nothing about keeping the F&P brand alive.
AMP Capital confirms Haier talks over F&P takeover
Yestrday / 3.25pm: One of Fisher & Paykel Appliances' major shareholders has confirmed it has been in takeover talks with Chinese whiteware giant Haier.
But AMP Capital Investors, which owns 5.2% of F&P Appliances, will not say if it endorses the move.
F&P announced yesterday Haier had expressed interest in a potential takeover and had approached three major shareholders over the weekend.
AMP Capital's head of equities Guy Elliffe told NBR ONLINE Haier approached AMP "in the last few days" and confirmed it had held discussions about a possible takeover with Haier board members.
However, he would not say if AMP supported the move or would sell its shares.
"We never give any indications of our trading strategy or likely intention to buy or sell in the future.
"This is a confidential discussion between two parties."
F&P shares (NZX: FPA) are up six cents today to $1.03, on trade of more than 3.3 million shares.
F&P chairman Dr Keith Turner said yesterday a takeover offer to shareholders was expected within a few days.
2.30pm: Shares in Chinese whiteware maker Haier, which is considering a takeover bid for Fisher & Paykel Appliances, are in a trading halt in Shanghai.
The Shanghai Stock Exchange website says Qingdao Haier has been suspended from trading for the whole day "for not having announced significant events".
One of Haier's first hurdles to taking over F&P could be government approval.
Land Information New Zealand general manager of crown property and investment, Brian Usherwood, says Haier will need consent under the Overseas Investment Act 2005 to acquire the remainder of Fisher and Paykel if the takeover involves significant business assets exceeding $100 million or sensitive New Zealand land.
"As yet no application has been received by the Overseas Investment Office from Haier to acquire up to the remaining 80% of the shares of Fisher and Paykel Appliances Limited."
1pm: Shares in takeover-threatened Fisher and Paykel Appliances rose again today, as Chinese whiteware maker Haier considers making an offer to shareholders.
F&P shares (NZX: FPA) rose seven cents, or 7.2%, today, to $1.04, on trade of 2.5 million shares.
The company's market capitalisation is $753 million - $210 million up on yesterday morning, when shares opened at 75 cents each.
Chinese whiteware maker Haier might have to pay $1.30 a share for Fisher & Paykel Appliances in an expected takeover, broking firm Forsyth Barr says.
F&P posted its internal projections to the stock exchange yesterday after Haier expressed interest in making a takeover offer and approached three other major shareholders.
In a research note issued last night, ForBarr analyst Andrew Harvey-Green says F&P's figures were better than expected.
The broking firm has increased its discounted cashflow valuation for F&P shares to $1.31 from 96 cents three weeks ago, after the company's full-year result.
"We believe Haier will have to offer something close to our DCF valuation to be successful," Mr Harvey-Green says.
Even if a takeover is unsuccessful, he says he does not believe the share price will fall significantly.
ForBarr's recommendation for F&P Appliances is buy.
F&P Appliances shares (NZX: FPA) jumped 29% yesterday to 97 cents, after starting the year at 36 cents.
More by David Williams and NBR staff
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Comments and questions19
I expect Haier will be successful because NZ investors have a long and sad history of taking the quick buck instead of being patient and wait for the long-term gains. Selling all our banks to Australia for a pittance is the worst example of short termism I've ever seen.
FPA has turned its business around and is now making good money even in what is a dire economic backdrop for consumer discretionary businesses. Think what they will earn when the housing/construction cycle turns up in NZ, Australia, and the US. In 3-5 years even a takeover price of $1.50 will look like a steal.
Meanwhile, the Chinese - good at playing the long, multi-generational "think big" game - will only gain from snapping up shares from the short-term thinkers.
Anyone in F&P has already had the "long haul" and would be wise to get out now while there is at least an offer on the table. The Mexican excursion was a debacle.
wish i had picked some up at 96 cents
Why not get in at 1.04?
#1 & #2 are right on the button!
I often work with Chinese foreign investors, some with multigenerational business dynasty aspirations. Much like the Gallagher, Todd and several other wealthy NZ business family's that retain share holding within family trusts. You don't hear much about their strategies as they arnt public companies and don't need to inform the stock exchange.
Sadly they are the exception & to be fair we are generally a country of small business people as its easy to start up with relatively easy access to a comfortable lifestyle if your moderately successful. We haven't been sharpened by centurys of competing with the masses for economic survival with no safety net that's for sure.
We can either grizzle at foreign investment or accept its the next step in a large businesses evolution. F&P sold out decades ago when it went public so this is really another evolutionarily step in F&P's set towards surviving & prospering as a listed company in the international scene. As an example look what an Indian millionaires investment has done for jaguar these last 2 years!
Damn wish I had a stake hold at 67c as well!
If it wasnt for John Bongaard & his merry directors, who hocked this company up to the turn of $500 million, the overseas investors wouldnt have a foot in the door. And it looks like these opportune investors have made it to the kitchen.
Jobs for the boys has turned to custard for all insundry; and major loss to NZ investors. Again at the expense of banksters, who give away money in the good times, and call the tune in the bad times.
Executives driven by short term bonuses are ruinning this world. Its time shareholders started dictating the terms of executive salaries.
And youd be dreaming to think any F & P manufacturing is going to stay in this country. Someone forgot to mention this to the purchasers of the leasebacked properties F & P sold to shore up their balance sheet.
Get the felling NZ investors are getting scr*wed left, right and centre. Thanks to John Bongaard & the clowns who bought into the logically unsustainable easy money the banksters created out of thin air.
think the market will be well aware of the news by opening tomorrow 1.04 will be 1.19
good chance to cash out
shit, should buy today .....
Yes, Kiwis take their profits but take a look at our sharemarket, it is so cyclical. CAV, up and down over the years, STU. Why not take the profit and then find another undervalued share? I bought FPA at 37 cents for the plain old reason that it is a good share and I thought they would come back again, pay dividends and maybe reach their full value, I had the time and patience. For me though, this happened rather quickly. I do this globally...in NZ is is easy: this year so far for me: MHI, CAV, FPA (and I am still waiting on the turn of STU)....
I brought F & P for the long haul at .45c personally I wanted to see them turn it around which they are doing and then hopefully prosper in the next five to ten years.. rather than make a quick buck now but I am sure the big boys will sell out
I agree with #1. $1.20 is far too cheap. FPA have turned it around, give them a few more years to see what happens. I want to see what progress is made with their new compressor which is said to revolutionise domestic refrigerators, and whether they can grow their motor business now that they are selling motors to Haier. FPA pioneered the direct drive washing machine and still make the best washing machines around. FPA lead the dish drawer market, etc etc. Too early to sell out now, especailly at $1.20, it's a steal. Haier should be making an offer around the $4 mark, not $1.20.
WDT are probably further ahead in the compressor market than FPA. WDT do suffer from a lack of marketing expertise on their board however
An NZ iconic company will soon be gone - along with hundreds of jobs within a few years.
Good one, John DonKey and his very rich mate, Mark Weldon - who cares about the future generation when there's profiteering to be done from a monopoly like the NZX.
What does this have to do with Weldon or Key? The regulator and the Prime Minister have little to do with the reasons why Haier first bought into F&P, and now want the rest of the company.
If you object to Chinese businesses wanting to own NZ businesses, then blame Helen Clark and Labour. They're the ones who put NZ into a Free Trade Agreement with China.
Without the FTA with China, NZ would have gone the same way as Greece.
The FTA has nothing to do with China companies buying NZ companies (so far, a pittance compared to what the Americans and Australians have bought in NZ) but everything to do with their time now in the sun.
Weldon and his DonKey mate had a great opportunity to revitalize the NZ sharemarket by promoting investments in equity. Instead, Weldon happily milked the NZX for all the monopoly profits he could extract while putting bugger all back.
That's what this has to do with Weldon and DonKey - DonKey supported Weldon in maintaining the status of the NZX as a self-regulating monopoly!
They must bid higher, higher, higher
Or should that be Haier, Haier, Haier!
Basically the Chinese taxpayer is transferring wealth to the NZ sharehoder via the Chinese government owned/controlled Haier