Buyout of Mike Pero rejected

New Zealand Finance's $20.5 million takeover offer for Mike Pero Mortgages has been resoundingly rejected by the mortgage broker's minority investors.

The 82c-a-share offer gained 55 per cent of the shares, but this included a 54 per cent stake sold by South Island investor George Gould.

Shares in MPM closed up 2c to 88c yesterday.

Independent directors had advised shareholders to reject the offer on advice from advisers Crighton Anderson Corporate Finance, which valued MPM shares in a range of 96c to $1.09.

New Zealand Finance spokesman Malcolm Lindeque said his firm had not expected to pick up much extra stock given MPM's share price was trading above the offer price. There was little point extending the offer.

However, Lindeque hinted there could be another attempt to buy out minorities.

"It's our intention to increase the stake," he said.

NZF's board will meet on Tuesday and will nominate two directors to the MPM board.

The independent directors said they accepted that if NZF did not gain full control of MPM there could be "some share price volatility in the short term".

MPM expects to post a net profit of $1.9 million for the 2006 financial year, up from the $1.6 million posted in the last year.

Gould also faced criticism from commentators and minority shareholders over the deal.

He bought MPM from its namesake founder for $15 million in March 2004.

After some financial engineering linked to the $1-a-share $25 million flotation, he emerged with a majority stake for an estimated investment of $1.5 million. At the takeover price, this stake was worth just over $11 million.

Although MPM delivered on its prospectus forecasts, it never rose above the $1 float price and later plunged as low as 55c.

Gould said at the time of the takeover that the decision to accept the offer was made in the best interests of his company, Gould Holdings.

It had been no reflection on the business prospects of MPM.

- additional reporting by NZPA