Tell them they're dreamin': The Kerrigan family in the hit 1997 Australian movie The Castle. Photo / Supplied
Tell them they're dreamin': The Kerrigan family in the hit 1997 Australian movie The Castle. Photo / Supplied
OPINION:
Good on the Aussies for trying, but in the spirit of The Castle's Darryl Kerrigan: tell them they're dreamin'.
AustralianSuper's offer to buy Infratil, including assets Wellington Airport and Vodafone, values the NZX-listed infrastructure investor at $5.37 billion.
That's a lot of money but the bid should be rejectedby shareholders (who are currently split).
There are two obvious reasons why I hope it will fail.
The first is, as Infratil chief executive Marko Bogoievski has politely put it - it undervalues the company's potential.
More bluntly, investors would be mad to accept the first offer in a takeover play - especially an unsolicited one from a buyer with extremely deep pockets.
AustralianSuper has about $200b of assets under management.
If it is serious about this takeover then it should already have factored in the prospect of raising the bid.
A premium of 28 per cent on yesterday's market close looks pretty good but needs to be viewed in the context of the last few years of market performance.
In the past four years, Infratil has returned a 122 per cent gain for investors.
In the last year alone it has risen 18 per cent - and that's including the huge Covid crash in March.
This is nothing like the kind of market we had in the 1990s and 2000s, which saw numerous New Zealand listed companies fall prey to foreign takeovers.
Back then equities were in the doldrums and many investors were desperate for cash.
Nowadays we have a market where investors are struggling to find places to put their cash for good long-term returns.
When you ponder why AustralianSuper wants to own a combination of Vodafone and Wellington Airport (the offer doesn't include Infratil's TrustPower assets), it doesn't really make a lot of sense outside the Infratil framework.
The other big reason I hope this offer fails is kind of emotive and kind of parochial.
I understand that this is business and if the price is right these things are secondary.
But I suspect many New Zealand investors will share that emotive response to this offer and it will be a factor in its success or failure.
I suspect Infratil's suitors will have undervalued that factor.
The company holds a very special place in the New Zealand Investment community.
Under the stewardship of its founder - the late and much loved Lloyd Morrison - Infratil was unapologetic in its sense of national pride, its belief in the value and importance of a strong local capital market.
Losing it would be a devastating blow to the NZX.
A little more than a decade ago, when Auckland Airport was facing a hostile takeover offer from the giant Canadian Pension Fund, Morrison and Infratil led the local resistance, which ultimately saw the bid for control rejected.
Morrison also fought hard against plans to merge the NZX with the Australian stock exchange.
Lloyd Morrison, former manager of Infratil. Photo / Supplied
"We are very lucky to live next to Australia," he said back in 2009.
"But [we] are better off with this country being independent, flexible, adapting and being competitive in terms of policy and rules. ''The worst thing that could happen to rugby in this part of the world would be the Wallabies and All Blacks to merge. We're lucky there are two strong rugby nations next to each other. Competition is good."
Morrison would almost certainly have pushed back against this offer.
It seems likely the current Infratil management will too.
Meanwhile, with the whole world closed for Covid, it's not hard to see why New Zealand's assets stand out to foreign investors right now.
We need to make the most of the investment opportunities that present themselves in this window, but it's vital we don't undervalue what we have here.
Here's hoping Infratil shareholders also hold firm and retain a long-term view on what this company can still achieve.
