Rival sticks to guns on Owens bid

By PAM GRAHAM

Mainfreight is not budging on its bid price for rival logistics company Owens Group, arguing that its takeover target is trading 40 per cent below budget.

Mainfreight yesterday gave notice of a two-week extension to its hostile bid for Owens, to September 29, to give Owens a "further opportunity" to provide information Mainfreight had requested.

Owens deputy chairman Denham Shale said his company was not going to conduct due diligence through the media.

"We will have a meeting in the day or two and we will come out with a further statement," he said.

Owens directors have advised against accepting Mainfreight's cash bid of $1.03 a share, which is conditional on getting 90 per cent acceptances, after advice from Deloitte Corporate Finance that the shares are worth between $1.09 and $1.27.

Owens has sold its hire business, Hirepool, to focus on transport, and says it is advancing plans of its own to take over rivals.

The sector is seen as fragmented and competitive and in for a big shake-up if Toll Holdings of Australia succeeds in taking over Tranz Rail and its associated trucking and freight forwarding business.

The independent report on Owens disclosed the company was trading 17 per cent below budget in the four months to July 31.

Mainfreight said the company owned Hirepool for three months and 10 days of that four months, and if that was stripped out it was 40 per cent below budget.

Mainfreight wanted that confirmed but Owens had, through its advisers, refused.

"Secondly we are saying, 'Where is the cash from the Hirepool sale?'," said Mainfreight managing director Don Braid.

Mainfreight believed about $11 million of cash was available after the sale of Hirepool in July and, instead, a small overdraft was presented in the independent report.

Also, the company was positive about its international businesses but had not quantified the impact of a closure of a magnesium project in Australia it serviced.

"We have asked these questions and they have given us a blanket 'no', so we have had to ask in a more formal manner," Braid said.

The Mainfreight bid is seen as a response to the Toll bid for Tranz Rail, which is also stalemated.

Owens' share register is tied up in family holdings. AMP Henderson owns about 10 per cent of the company.

Chairman Norman Geary said last week the company would proceed with its own growth strategies if Mainfreight did not increase its offer to a level acceptable to shareholders.

He said the Deloitte report contained a greater level of disclosure and that "should enable Mainfreight to increase its offer".

Mainfreight's position yesterday was that "based on the information shareholders have received to date, Mainfreight has seen no reason to increase its offer price above $1.03 a share".

Owens shares closed at $1.04 yesterday.

The bid

* Mainfreight is offering to buy all Owens Group shares.

* Offer price: $1.03 a share.

* Closing date: September 29.

* Offer conditional on reaching 90 per cent ownership.

* Independent report values Owens at $1.09 to $1.27 a share.

* Owens board wants a higher offer.

* Owens share price yesterday: $1.04.