Edison extends bid for Contact

By CHRIS DANIELS energy writer

Shareholders have been given an extra two months to accept or reject Edison Mission's $1 billion takeover offer for Contact Energy.

Edison says the logistics of reaching Contact's 121,000 shareholders is the reason for the extension and that it is not a sign that the takeover bid is in trouble.

Edison Asia Pacific vice-president Bob Driscoll said yesterday that the offer had been extended from December 6 to February 3.

The offer price was now $4.14 a share, adjusting the earlier $4.25 a share offer for the 11c a share dividend due to be paid on Friday.

Mr Driscoll urged Contact's small shareholders to send back their takeover acceptance forms.

"Shareholders do not gain anything by waiting," he said.

"Under the new Takeovers Code, if the offer becomes unconditional shareholders will get paid the same price, even those whose shares are compulsorily acquired."

The fate of the offer is now in the hands of institutional shareholders, some of whom have said they think the price is too low.

Because at least 20 per cent of Contact's capital is held by institutions, they have the collective power to stop Edison reaching the 90 per cent acceptance level it needs to compulsorily acquire outstanding shares.

Mr Driscoll said reaching all shareholders, many of them first time sharemarket investors, was proving to be difficult.

Edison thought institutions would wait until the last minute before deciding if they would accept the offer.

He thought the majority of other shareholders would take up the offer a week to 10 days before it closed.



He did not know if any institutions had sold yet, or how many small shareholders had accepted.

"There is speculation that we will pay a higher price. We will not.

"Some are also saying that the price of Contact's shares indicates that the market believes that the offer will fail."

A "more relevant interpretation" was that the current share price showed the market did not believe the inflated valuations that some brokers had put on Contact shares.

Contact's independent directors and brokers Forsyth Barr have recommended that shareholders accept the offer.