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

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