KEY POINTS:
MFS Living and Leisure's takeover bid for Tourism Holdings gathered momentum yesterday but some key shareholders are still unimpressed.
Tower Asset Management, which holds just under 3 per cent, looks likely to turn down the offer.
Australian firm MFS Living - offering $2.80 a share, conditional on 90 per cent acceptance - has now increased its stake to 58.6 per cent.
As predicted in the Business Herald yesterday, AllianceBernstein has joined some other major shareholders to accept the deal. AllianceBernstein's sale of its 8.6 per cent stake followed moves by Sterling Grace - representing a group of US investors - to sell 19.93 per cent cent and by the Accident Compensation Corporation to sell its 4.62 per cent.
But Paul Robertshawe, portfolio manager for equities at Tower, said the offer probably did not realise the value of Tourism Holdings.
"I can understand why others might have a different view but at this stage I guess it's sort of getting down to the point where we're probably not going to accept," Robertshawe said. Tower was yet to make a final decision, he added.
AllianceBernstein portfolio manager Andrew Bascand said it was a complex decision, partly because of the loss of potential imputation credits.
Tourism Holdings has decided not to pay a special dividend of up to 30c a share, making use of available imputation credits. The loss of potential credits had to be balanced against the offer price and future prospects, Bascand said.
Forsyth Barr analysts yesterday changed their view, recommending investors accept the deal.
The momentum had swung in favour of MFS Living, particularly in light of the appreciation of the dollar - decreasing near-term earnings risks for the 2008 financial year, Forsyth Barr said. MFS Living's offer was below Forsyth Barr's valuation of $3.18 but was credible and had been boosted by a 6c a share final dividend.
The discount might be justified because of industry volatility and the risk of transforming the business.
MFS yesterday said neither the price nor the Saturday deadline would be changed. Tourism Holdings share price closed up 6c yesterday at $2.75.
