GPG took calculated risk - but result not a catastrophe

By PAUL PANCKHURST

Debating topic of the week: if top commercial lawyers expected the Takeovers Panel to block Guinness Peat Group's partial takeover offer for Rubicon, why did the corporate raider bother making it?

Answer: the Takeovers Code left room for argument, and GPG lost little by giving it a go.

Quizzed yesterday, Roger Wallis, a partner at law firm Chapman Tripp, said he had expected the panel's thwarting of the offer on Friday.

Another senior commercial lawyer, who did not want to be named, said GPG took a calculated risk and losing was inconvenient rather than disastrous.

Thirteen days ago, GPG unveiled a $67 million offer to lift its 19.9 per cent stake in Rubicon - the biggest single shareholder in Fletcher Challenge Forests - to 51.9 per cent.

But GPG also said it would be happy with a stake of between 30 and 50 per cent.

The Takeovers Panel said partial offers could not be made in the alternative.

It also said "between 30 per cent and 50 per cent" was not specific enough: if GPG wanted to be in that band, it had to name a number.

In making its ruling, the panel said it had made repeated attempts to contact GPG's legal adviser, Auckland firm Lowndes Jordan, seeking its explanation for why the offer complied with the code.

Lowndes Jordan was unable to do so by the deadline of 5.30pm on August 30.

Wallis, of Chapman Tripp, said the panel's decision fitted with its general approach of a literal interpretation of the detailed requirements of the Takeovers Code.

The second (anonymous) commercial lawyer said the interpretation argued by Guinness Peat fitted loosely within the wording of the code.

It was a case of taking a risk, on the basis that "you might get away with it".

One argument from GPG director Tony Gibbs was that specifying a percentage figure could lead to an odd result if shareholders were keen to sell and the figure was too low to meet demand.

Of the offer, he said: "I thought it was beneficial for the shareholders, and I'm still scratching my head to see why it's not."

Market watchers said GPG undoubtedly had a Plan B ready to roll.

"GPG would've done their homework," said ASB Securities managing director Tim Preston.

"While it [the panel's decision] may cause a bit of a short-term hiccup, I think they have their plan of attack quite clearly worked out."