By BRENT WHEELER*
Further to yesterday's instalment, a brief update and some numbers on the Montana takeover as we observe:
*Brokers declare that minorities have been exploited,
*The Chairman of the Auckland Chamber of Commerce worries about New Zealand's reputation,
*The Government says the situation is unacceptable,
*There are numerous statements saying a Takeover Code
would have prevented this intolerable situation,
*Mr Peters says we should have passed the code years ago.
Point One
With the Lion bid the shareholders' wealth increased by over $53.7m compared with the previous bid. Everyone is better off. Competition in the capital markets added $53.6m for all, including minorities.
Point Two
If there had been no bids at all, and the price had remained around $4.00 (optimistic given a 2000 range of $1.70 - $4.02 and a low even in 2001 with a bid likely, of $3.84) at least $85.8m in shareholders wealth would have been lost. Everyone, including minorities would have lost.
Point Three
If there had been a Takeover Code then:
*There may have been no bid, at $4.40 loss, minimum $85.4m
*There may have been no bid, at $6.65 loss, minimum $139.5m
*100% would have been "force bought", at $4.40 loss, minimum $53.7m (if there was a bid this high)
Conclusions
*The takeover has enhanced shareholder wealth
*The competition has enhanced it even more
*The wealth increase for everyone at 16.25% is considerable
*The Takeovers Code would have prevented an increase this big and possibly any increase at all
*The NZSE got it right for shareholders
*There are more green eyes and self interest than there is exploitation.
* Brent Wheeler is an economic analyst.
Herald Online feature: Montana takeover
