Forum Archive Index - June 2004

[Robin Benson <rob@hammerheadmedia.co.uk>]

There's a lot of amusing spin surrounding RPI's bid to take control of 
WRI, much of it contradictory.

On the face of it, RPI have got their work cut out for them trying to 
convince existing shareholders that they should bale out of WRI because 
it's doing so badly, yet they want to buy a piece of it. The only 
explanation for this is they see themselves as making a difference -- 
at least this is consistent with their bid for 50.01%

Norgate and McConnon say they want to fully understand the business yet 
they're paying close to $115m for a majority stake? Hello? They need to 
make a beeline for MacDunk and bribe him and his truckdrivers with fine 
smokey Edradour malt in exchange for some clues, although they might 
end up going after HQP instead. Norgate would look like a million bucks 
(or two) in a bright blue cherry-picker.

Norgate berates the WRI board for issuing documents with errors, 
demanding retraction. However, I understand that contained within an 
NBR article that RPI has provided to WRI shareholders is an error that 
equates to approximately $4.3m. Good for goose, good for gander?

Are RD1 hunting WRI? Fonterra hold a few wildcards in this equation. If 
they are interested themselves, why would they be flushed out now, 
Gibbs style, unless they saw RPI getting close to the wire?

If RPI isn't successful, and they exit their WRI holding soon 
thereafter, they could be in for a minor hiding, as the market doesn't 
share the same valuation of WRI just now. A loss of 5cps and the costs 
of making the bid will run to $4m+, and that's making some fairly 
optimistic assumptions (average cost of acquisition $1.45 per share; 
average sale per share $1.40, $0.5m costs). RPI's exit intentions 
appear to be a clear threat to shareholders: accept our offer otherwise 
the market will be awash with WRI shares, and you'll be sorry you 
didn't listen to uncles Craig and Baird.

So, have Mr Norgate and friends the latitude to pay more than they're 
letting on? RPI began buying around $1.40, accumulating on-market at 
$1.44-$1.45. If he's looking for an average entry price for the stake 
of around $1.50, then possibly the current offer on the table at $1.65 
is the upper end of his budget. It's not like it's been quick to get 
here either -- around nine months. How about another three months at 
the outside? -- maybe there's ice-cream to join the strawberries?

Robin


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