Game on again down at Oyster Bay

The battle for control of Oyster Bay is again set to flare up into an open bidding war after the High Court yesterday ruled Oyster Bay's target company statement was unsound and threw out Delegat's successful takeover offer.

A commercial lawyer said the decision underlined shareholders' right to know about the "hidden value" a bidder might be able to extract from the business after a successful takeover.

In the High Court at Wellington, Justice Forrest Miller cancelled contracts for Oyster Bay shareholders to sell to Delegat's at $4 a share.

Justice Miller's decision upheld the Takeovers Panel's view that Oyster Bay shareholders should have been told what the value of the company would have been without long-term contracts to supply Delegat's with grapes, and that a valuation by Ferrier Hodgson should have been prepared with more accurate information from land valuer Logan Stone.

The upshot is that the deck is cleared for a resumption of the long-running battle for control of Oyster Bay between Delegat's and Seddon businessman Peter Yealands.

Yealands has already tabled a $4.50 a share bid, trumping Delegat's $4 which two months ago looked to have secured control of the company, but if past events are any guide, Delegat's is unlikely to throw in the towel now.

"It certainly is game on again," said David Rankin, a major shareholder in Oyster Bay and Yealands ally.

Rankin, who said he would seek election to the Oyster Bay's board, said the outcome was "pretty much signalled" a couple of weeks ago when the panel adopted the view that Delegat's offer should be cancelled.

The panel said it was pleased Justice Miller had endorsed its view. Buddle Finlay partner Mark Russell said Justice Miller's decision was "legally and commercially right".

"The valuation information, which it transpired was omitted from the target company statement, was clearly crucial information to the Oyster Bay shareholders.

"You've got this locked-up value sitting in the land and for Delegat's to acquire a controlling shareholding would give them the ability to unlock that value. It's something that someone should attempt to put a price on and it's more than $4 a share.

"You have to try to put a value on the ability which a controlling shareholding gives to the bidder to unlock hidden value in a company ... the original information that went out in the target company statement didn't touch on that."

Russell said the decision should reinforce market confidence in the panel's ability.

"They've shown that they're prepared to move quickly if required. They showed flexibility in that they were prepared to re-examine a matter when further information came to light," he said.

"The panel will be pleased obviously that they got vindicated and that will make them feel more confident for the future," another lawyer said.

Yealands said he was "very pleased with the level of competency of the justice system".

Delegat's had treated Oyster Bay as if the company was its colony. "In actual fact, Oyster Bay was never set up to be a colony and Delegat's will have to accept that."

A spokesman for Delegat's said the company was looking at the implications of the decision and would consider its options, particularly with with regard to the shareholders that accepted its offer.