KEY POINTS:
Melbourne-based Toll Holdings yesterday made a full takeover for the remainder of NZX-listed Toll NZ, just a day before a change in the Takeovers Code would have made it much more difficult to mop up the minority shareholders.
The price paid for Toll NZ (formerly Tranz Rail) was $3 a share, delivering a solid profit to shareholders who resisted Toll Holdings' $1.10 a share bid four years ago.
Toll already held 84 per cent of the stock and an agreement signed with US fund Third Avenue Management would take it to 94 per cent and beyond the threshold to compulsorily acquire all remaining shares.
Under the Takeovers Code, a full offer which moves to compulsory acquisition requires acceptance from more than half the outstanding shares to force any investors left over to sell up at the offer price. If a company undertaking compulsory acquisition fails to get acceptance of more than half the shareholders and if 10 per cent of those not accepting object to the offer, then the Takeovers Panel will appoint an independent expert to determine a price.
The agreement from Third Avenue would see Toll Holdings comfortably clear the last hurdle.
However, as of Monday, July 1, any pre-bid agreement would be excluded from the calculation, meaning Toll Holdings would have needed more than half the remaining 6 per cent to eliminate any right to object.
Toll Holdings' managing director Paul Little said full ownership would enable the company to better structure its New Zealand operations and grow more quickly.
"The acquisition is expected to be earnings per share positive from the outset and the new structure will enable early integration of other Toll businesses and leave the company in a position to aggressively pursue acquisition growth opportunities," Little said. "The offer is consistent with our strategy to rapidly grow our businesses within the Asian region and structure our business to support that growth."
The $3-a-share offer was four times the size of the original bid made by Toll Holdings more than four years ago at 75c.
Rickey Ward, domestic equities manager at minority shareholder Tyndall Investment, said the higher price was justification for holding out.
"We always held the view ... that here was a company that was asset rich and management poor," he said. "It really had been brought to its knees by effectively mismanagement, to be quite honest, by previous owners."
However, Ward was not convinced that $3 was a good price. There had been a void of information for a long time, Ward said.
"We still haven't as yet had any information regarding their access fee arrangements with the Government to use the track and that's hugely material in one part to whether this company can make some decent money."
Rail transport would also benefit from the carbon constraint regime under the Kyoto Protocol, he added.
"There's a lot of those sort of unknowns which are pretty hard to value at the current time," Ward said.
"Inherently I can't help but get the feeling that they have still got this reasonably cheap if you took a long-term view ... "
An independent advisers' report and target company statement would be issued by Toll NZ shortly. Toll NZ shares closed up 17c yesterday at $2.97.
