Hart's bid to wrap up Burns Philp ranked as 'fair'

Graeme Hart's bid for full control of Burns Philp has cleared one of its biggest hurdles, with independent adviser Grant Samuel declaring the offer "fair and reasonable".

Hart's New Zealand-based investment company Rank Group has offered A$1.10 a share - or A$1.3 billion - for the 42 per cent of Burns Philp it does not already own.

When he launched the bid on August 22, Hart said the value of Burns Philp was transparent because, after a series of asset sales, it consisted of cash, a 20 per cent stake in Goodman Fielder, and Blue Bird snack foods.

The Grant Samuel report, commissioned by Burns Philp to assess the offer, has agreed with that view.

It values Burns Philp shares at between A$1.084 and A$1.105.

The report notes that the offer is at a relatively low premium to the average A95.5c at which the shares traded for three months prior to its announcement. Most successful takeovers have a premium of 25-30 per cent, sometimes higher. However, the low premium reflected the nature of Burns Philp assets.

"More importantly the share price has arguably been influenced by expectations that Burns Philp would be Rank Group's vehicle for expansion," the report notes. With Rank controlling 57.6 per cent of shares and the only other significant shareholder, Lazard, holding 8 per cent, no other offer was likely to emerge.

The other possible alternative for the company would be liquidation, but "the liquidation would be unlikely to to realise value in excess of A$1.10".

A committee of directors, including independent directors Mark Burrows and Fred Smith as well as managing director Tom Degnan, have recommended shareholders accept the offer, which will formally open on September 7 and close on October 9.