F&P Appliances takeover – China's Haier names its price

Haier 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.

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.