Deal given Takeovers Panel tick

Waste Management doesn't expect the deal to run into trouble with the authorities, unlike one of its trucks in Auckland yesterday

The Takeovers Panel will not investigate the so-called merger of Waste Management and Transpacific Industries Group announced this week.

Although some investors have called for the panel to investigate the proposal, it said the structure of the deal did not breach the Takeovers Code.

"On the information we have got, the code does not apply to it. Therefore, we are not inquiring any further into it," said Kerry Morrell, the panel's senior executive officer.

"It's being done under the amalgamation provisions in the Companies Act and in a manner which does not bring it under the jurisdiction of the code or the panel."

If Waste Management shareholders approve the deal, Transpacific will buy all of the Waste Management shares and the New Zealand company will become part of Transpacific's local subsidiary.

The deal has attracted criticism that it is in reality a takeover dressed up as a merger and, as such, should require the 90 per cent shareholder support that is required in a takeover under the code.

Under the structure of the deal, just 75 per cent of shareholders need to approve the deal for Transpacific to compulsorily acquire all of the Waste Management shares.

Waste Management chief executive Kim Ellis said he did not care what the deal was called in practice, it was a merger of two complementary businesses with strengths in two different countries.

He said the deal had been structured to be a "black and white solution - on or off".

"We didn't want to ever get into a situation where they could make a takeover offer and end up with 51 per cent because then we'd be stymied from operating in their market and that would be the end of our independence."

Ellis said both parties were more than satisfied that the deal met necessary regulatory requirements.

The biggest concern was the attempt, including by some fund managers, to "spoil the party".

"And all I can say is, well, if the result of that is the deal falls over, to hell with them, they'll never get an offer like this again and I certainly won't be around to run the company."

Transpacific is the leading player in the liquid and hazardous waster sector in Australia and Waste Management has a dominant position in the solid waste sector in New Zealand.

Shareholders Association chairman Bruce Sheppard said he had some sympathy for the way Waste Management had "jumped out of the loop".

A company that made a takeover bid conditional on hitting 90 per cent could waive any condition except price.

This could result in a company reaching only 51 per cent ownership, "waive it and make the condition subject to hitting [51 per cent] and say, 'We've already got that, the bid's unconditional, we've got control, we're sacking the board and have a nice life'."

Sheppard said: "That's a fundamental flaw in the code that needs to be redressed. The conditions of a bid should not be capable of being waived."


The proposal

* Waste Management has agreed to merge with Transpacific Industries.
* Shareholders are being offered $8.64 cash a share.
* Waste Management will seek shareholder approval in May.
* The merged company plans to list on the NZX.

- Additional reporting Staff Reporters