F&P premium price an investor 'vote of confidence'

The premium price paid by investors for new shares in Fisher & Paykel Appliances is a vote of confidence in the company's expansion plans, analysts say.

Fisher & Paykel this week announced the issue of $65 million in new shares to help fund the $158 million purchase of Italian stove maker Elba, with the remainder funded by debt.

Some $55 million worth of shares were placed to institutional investors at $4.60 each, a 2.2 per cent premium to their previous close at $4.50. The remainder of the share issue will go to retail investors.

The shares gained further to $4.63 on Friday after the share suspension for the capital raising was lifted.

Fisher & Paykel chief executive John Bongard said he was delighted with the success of the institutional placing.

"To get a premium these days is quite unusual ... we were pleasantly surprised," Bongard said.

David Lane, head of research at UBS, said it was an exceptionally good outcome for Fisher & Paykel.

"It's a reflection of the fact that the investors liked very much what the company was buying," Lane said.

Though not expressing an opinion himself on the merits of purchasing Elba, Lane said the premium paid for the new equity clearly showed investors approved of the move.

"If they get the synergies that they suggest, it looks like they have bought the asset at a very good price. It's earning accretive which investors like."

Elba manufactures freestanding cookers, built-in ovens and cooktops, which it exports to more than 54 countries.

The purchase is expected to boost Fisher & Paykel sales by about $142 million in the year to March and contribute $4.7 million to net profit after tax. This was expected to increase to $11.4 million in the next few years.

Before long Europe was expected to overtake both Australia and New Zealand in terms of sales.

Retail shareholders will also get the chance to subscribe for up to $5000 worth of shares.