Chinese group Haier yesterday upped the pressure on Fisher and Paykel Appliances shareholders, saying they should be willing to take a significant risk on FPA's future to reject Haier's takeover offer.
Haier already has a 20% stake in FPA with the promise of 17.6% more from an Australian holder. In response, FPA independent directors issued another "do not accept" recommendation, saying the directors did not believe Haier's $1.20-a-share takeover offer "adequately reflected" the value of FPA.
In the independent adviser's report, sent to shareholders last week, the valuation range was between $1.28 and $1.57 per share.
Independent adviser Grant Samuel had confirmed it had no conflict of interest in FPA and the independent directors believed that Grant Samuel brought an unbiased view to the valuation of the company, FPA chairman Keith Turner said.
However, Haier New Zealand Investment Holding Company chairman Liang Haishan went on the attack, describing the adviser's valuation base as overly optimistic.
"The independent adviser's valuation range places considerable weight on FPA's five-year strategic plan. We believe there is a high degree of risk that the financial forecasts represented in that plan will not be achieved."
The earnings before interest and tax (ebit) in the first year (2013) of the five-year plan used by the adviser was between $6.2 million and $14.2 million higher than more recent guidance provided to the market by FPA's own board, Mr Liang said.
The board's downward adjustment to the strategic plan forecasts for 2013 highlighted the risks associated with achieving the forecasts for that and each subsequent year and supported Haier's opinion the adviser had been overly optimistic.
"The target company statement even indicates some uncertainty regarding the achievability of the FPA board's own, less optimistic, guidance for 2013.
"FPA's failure to meet its own initial profit guidance in each of the 2010, 2011 and 2012 financial years further demonstrated the challenges in delivering against plans in a highly competitive market and uncertain economic environment," he said.
The Haier offer provided shareholders with an opportunity to realise cash from their investment at "excellent value".
It represented a 60% premium on the share price before the market was advised of the offer and a 91% premium on the volume-weighted average trading price in the previous three-month period, Mr Liang said.
He warned the offer price was much higher than FPA shares were likely to trade if Haier's offer was unsuccessful.
The offer price was supported by Allan Gray Australia Pty, the largest shareholder after the Haier Group with 17.6%.
"Shareholders will need to decide whether they are willing to take the significant risks inherent in FPA attaining its five-year strategic plan or to accept our offer which, if successful, provides shareholders with a certain cash payment."
