Offer misses market price

By Geoff Senescall

A takeover bid for Donaghys got off to a bad start yesterday with the offer failing to match the market price.

After the company issued a don't sell notice on Monday, Donaghys managing director Ross Callon in a joint venture with AMP Asset Management unveiled a 145c a share offer after the market closed. This compares with a closing price of 150c, down 5c.

In response to the share price, Mr Callon - the son in law of Donaghys chairman and major shareholder Graeme Marsh - said the bid was "definitely not opportunistic."

In the last year the share price had traded as low as 92c, he said.

Mr Callon said that with a market capitalisation of just $40 million, Donaghys, a Dunedin-based rope maker, was too small to attract institutional investors. "Apart from AMP we have almost no institutional ownership. The institutions have made it clear that they are focusing on the top 40 listed companies, leaving small cap stocks like Donaghys with low share demand.

"In recent years the institutional exit has depressed the share price and reduced Donaghys' options for expansion."