Haier Group must increase its offer for Fisher and Paykel Appliances shares if it wants shareholders to accept, Forsyth Barr broker Haley Van Leeuwen said yesterday.
"With the independent adviser arriving at a valuation range of $1.28 to $1.57 per share, above the current $1.20 offer price, it has become harder for Haier to get the 50.1% and, in our view, all but impossible to get to 90%."
FPA's independent directors last week issued a "do not sell" notice but the Chinese-owned Haier Group, already a 20% shareholder in FPA, told shareholders the $1.20 per share offer was a substantial premium to where shares were trading before the takeover bid.
Mrs Van Leeuwen said she was comfortable with her valuation range. The $1.27-per-share valuation had used the bottom end of FPA management's five-year guidance to take account of the risks of achieving goals set out in the guidance.
"Using the top end, we get a valuation of $1.52, similar to that of the independent adviser."
The closing date of the offer was November 6. If Haier was to amend the terms of its offer by increasing the offer price, it had until October 22 to do so, assuming the offer was not extended, she said.
Given the shareholding structure of FPA, and the nature of FPA, it was not guaranteed that Haier would get to 50.1%.
"In our view, to ensure success, Haier may have to increase its offer to at least the bottom of the valuation range."
If Haier's end goal was to get to 90%, it would need to raise its offer significantly, Mrs Van Leeuwen said.
Given that assessment, Forsyth Barr had raised its target price from the current offer of $1.20 to the bottom of the valuation range at $1.30.
