Watson takeover bid arrives at last

By SIMON HENDERY

Another listed company is destined to disappear from the Stock Exchange's board, with Eric Watson's Logan Corporation making a long-anticipated $33 million play for full control of Pacific Retail Group (PRG).

Logan, a subsidiary of Mr Watson's Cullen Investments, owns 63 per cent of PRG. Yesterday it announced an above-market bid for the rest.

Logan will offer $1.76 a share 31c above last Friday's closing price.

At that price, the 18.7 million shares it does not yet own will cost $32.9 million.

PRG owns the Noel Leeming, Bond & Bond, Computer City and Living & Giving chains and this month launched a new computer store, Big Byte, in Christchurch.

The company's annual report says that as of June 27, there were 624 shareholders. Of those, 451 held fewer than 5000 shares.

After Logan, the company's largest shareholders are listed as Axa Asia Pacific (10.8 per cent), and PRG directors Mark Hotchin (8.6 per cent through Platinum Retail) and Nick Gordon (3.3 per cent through Gordon Marketing).

Cullen group managing director Phil Newland said the takeover bid offered shareholders "a significant premium above the average share price over the past six months".

An independent adviser's report is being prepared on the offer.

In the meantime, Cullen would buy up to 5 per cent more of PRG's shares in the market, which it can do under the "creep" provisions of the Takeovers Code, Mr Newland said. If the bid proceeded, the company was "comfortable" it could buy some or all of the remaining shares.

PRG reported a net profit of $10.4 million for the year to the end of March, up from $7.7 million the previous year. Revenue was up from $360 million to $402 million.

The company's low liquidity since Cullen's buy-in, and policy of not paying dividends, have proven a turn-off for investors and analysts, who have been expecting a full takeover by Cullen for some time.

Cullen bought 74 per cent of PRG in 1999, most of the stake coming from three big shareholders: majority-owner Murray International, and former Pacific Retail executives Sir Roger Bhatnagar and Greg Lancaster.

Cullen then cut its holding to 63 per cent through sales to Mr Hotchin and Mr Gordon.

Yesterday, $335,000 worth of PRG shares traded at up to $1.77 each.