KEY POINTS:
Australian company MFS has committed itself to Tourism Holdings as a cornerstone shareholder at the very least, with the purchase of Sir Selwyn Cushing's 10 per cent stake weeks before its takeover bid for the company closes.
MFS Living and Leisure Group yesterday said it had purchased the stake from Sir Selwyn and associated interests for $2.76 a share, or $27.15 million.
The deal sees the Cushings - who have had a close involvement with the company, including a seat on the board - secure a price which is by no means guaranteed to other shareholders. The sale followed discussions initiated by the Cushings, MFS said.
Under its takeover offer launched last month, MFS is offering $2.80 a share for Tourism Holdings, one of the country's leading tourism firms with assets that include a string of high-profile attractions and a fleet of camper vans.
The offer is conditional on achieving acceptances of 90 per cent by July 21.
Forsyth Barr research manager Rob Mercer said the Cushings may have seen some risk that MFS would not reach 90 per cent and decided to sell while they could.
Mercer said MFS's purchase of the Cushing stake opened up a fresh range of possible outcomes for MFS's offer, but indicated it was at the very least committed to being a 10 per cent shareholder.
Should it fall short of its target, which would allow it to compulsorily acquire the remaining shares and delist the company, MFS could rejig its offer to achieve a 50.1 per cent majority stake.
Another scenario could see it settle for a cornerstone stake of up to 19.9 per cent while rekindling its offer for the company's attractions business which preceded the full takeover bid.
MFS could also sell off the Cushing stake, but probably at a loss as Tourism Holdings shares would likely retreat if the bid failed.
Meanwhile the Cushings' acceptance will inevitably give other shareholders food for thought.
While David Cushing had a seat on the company's board, which he has now resigned, the Cushings were well placed to make a informed decision on the merit of MFS's offer.
But, as an independent report by Ferrier Hodgson values the company as high as $3.07 a share, other shareholders may prefer to sit tight.
Forsyth Barr values the stock at $3.18 and says investors should resist the short-term gain offered by MFS.
Shares closed yesterday at $2.76.
