KEY POINTS:
A day after MFS Living and Leisure said it would not increase its bid for Tourism Holdings (THL), the Queensland company sweetened its $2.80 takeover bid by announcing it was bringing forward payment of the 6 cents per share final dividend.
MFS said it had waived its condition for its takeover offer in respect to the payment of a final dividend.
THL chairman Keith Smith said the board had declared the payment of a final dividend before confirming the group's trading results because the earnings were known within a small margin of uncertainty.
THL said on Tuesday that trading net profit before one-off costs would be in the upper end of a range between $17.5 million and $18.5 million.
The fully imputed dividend will be paid on July 25 to those on the share register on July 20 and replaces the final dividend normally paid in October.
MFS said yesterday it would not extend its offer which is due to close on July 21.
The move comes as the THL has come under heavy criticism from the Shareholders' Association for benefits THL executives get if the MFS bid is successful and for agreeing to a $3.5m break fee if the offer fails.
The THL board had earlier decided not to pay a special dividend of up to 30 cents per share from available imputation credits because some shareholders would be disadvantaged by a special dividend.
The sweetening of the offer comes as analysts suggest the MFS offer is due to fail. It only has 22.3 per cent acceptances and the offer is conditional on getting 90 per cent.
MFS chief executive Marshall Vann said in a statement yesterday that MFS "will not in any circumstances increase its offer price or extend the final acceptance date".
First NZ Capital analyst Jason Familton said he doubted today's sweetener was enough to tip the scales. He believes MFS might have to bid $3.00 a share to succeed.
Fund manager Tower, which owns less than 5 per cent of THL, said before today's announcement it would not accept.
THL shares peaked at $2.80 at the start of June, but have since fallen to $2.55, reflecting the diminishing odds of shareholders backing the deal or a higher offer appearing, Mr Familton said.
Mr Familton, who values THL without a takeover premium at $2.24 a share, said the offer would struggle even if cornerstone institutional shareholders Sterling Grace and AXA, who between them hold almost 30 per cent, sell.
Both have yet to signal their intentions.
The independent advisors' report on the offer valued THL at $2.67 to $3.07.
Grant Williamson, a partner in brokerage Hamilton Hindin Greene, said many retail shareholders had seen the success of investors who had held out in takeovers such as Contact Energy, Carter Holt Harvey and Toll Holdings.
"They're sick of seeing all these companies leaving the market and they're taking a much more hard-nosed approach."
Bruce Sheppard, of the Shareholders Association, on Monday wrote to THL shareholders saying the bonus incentives for executives if MFS is successful amounted to a bribe and put them is a conflict of interest.
THL chairman Keith Smith responded, saying Mr Sheppard's letter was defamatory, made "a number of blatantly false accusations" and called on the association to retract the letter within three working days.
Mr Smith said the THL executives' "bonus" payments would be paid for increasing shareholder wealth.
He said the break fee would only be incurred if THL's directors did not recommend the bid or another offer was received that caused the MFS bid to fail.
Because the directors had recommended the offer and no superior bid had been received, the break fee was not incurred, Mr Smith said.
THL shares were unchanged on $2.55 on the sharemarket today.
- NZPA
