The Fisher and Paykel Appliances board is recommending shareholders take no action on the Haier Group takeover offer until an independent report is undertaken.
Haier, a 20% shareholder of FPA, launched a takeover bid at $1.20 a share, well ahead of where the shares had been sitting before the bid. Shares rose to $1.17 yesterday, just below the offer price, after trading as low as 76c last week.
Two directors associated with Haier have recommended the sale go ahead but board chairman Keith Turner emphasised that the independent board had made no recommendation regarding the proposed offer and would not do so until a full assessment had been completed by the independent board and the adviser.
"Shareholders should wait until this report is available in October before taking any action," he said.
Forsyth Barr broker Haley Van Leeuwen said the $1.20 offer was a good start but it was at the bottom of an "acceptable" range.
"As our valuation shows, it is not difficult to place a greater value on FPA, given the potential within the business. While the FPA board is supportive of the bid, that support is subject to the independent adviser valuation range and that there is no superior offer."
Haier's key conditions were obtaining 50% control and Office of Overseas Investment (OIO) approval, she said.
Haier's effective stake was now 37.46%, following a lock-up agreement with Allan Gray Australia for 17.46% of FPA. It seemed likely the takeover would succeed, with the remaining question being at what final price, Mrs Van Leeuwen said.
"While FPA is an iconic New Zealand brand, we do not envisage the OIO approval to be a major stumbling block as there is no sensitive land involved in the deal."
Haier intended to keep FPA intact in the short term, she said.
However, it might sell the finance business, which was not a great surprise since it had been non-core to the appliance business for some time.
The key question was around Haier's approach to FPA's extensive intellectual property, Mrs Van Leeuwen said.
Haier was expected to send out offer documents in the next two to four weeks, with FPA following with a target company statement 14 days later - including the independent adviser valuation.
The offer would be open for 45 days after Haier had sent the offer documents.
Given the information FPA recently released, it was possible the independent adviser arrived at a valuation that supported a higher offer price.
Mrs Van Leeuwen said that while not expected, a counter-offer from another appliance manufacturer was possible.
"Given we expect the conditions of the offer to be met, there is next to no downside for investors to await the outcome of the independent adviser report."
The Forsyth Barr downgrade of FPA shares from buy to hold reflected the fact the upside was also limited, she said.
Mr Turner said the board was already receiving calls from parties interested in acquiring certain FPA divisions.
"FPA is clearly a very desirable business and we need to ensure that value is maximised for shareholders," he said.
