Tuesday 13th October 2009
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Horizon Energy Distribution shareholders have been advised to reject a 51% partial takeover by Marlborough Lines.
Shareholders of the Bay of Plenty-based lines company were offered $3.96 per share by its South Island suitor. The stock last changed hands at $3.40. Any deal requires the approval of Horizon Energy’s 77% shareholder Eastern Bay Energy Trust. Horizon Energy directors said an independent adviser concluded that Marlborough Lines September 29 is inadequate. Horizon Energy shares are conservatively valued at $3.96 to $4.68, it said.
In a letter to Horizon shareholders recommending rejection of the offer, directors said it provides inadequate value and fails to appreciate the true value of the company’s overall business and the growth strategies.
“If the offer is accepted, because it is a partial offer, shareholders will be left with significantly smaller, and potentially less liquid, holdings, which may trade at a lower price in the future, especially given that there would then be two major shareholders on the register,” said Horizon chairman Rob Tait.
“Also, given that Marlborough Lines will control the company, there is no assurance of any future offer being made and therefore no guarantee that shareholders will receive any premium for their remaining shareholding.”
Tait said that by holding 51% of Horizon Energy, Marlborough Lines would control the Board composition and ultimately be able to change the business plan, strategic direction, management arrangements and dividend policy.
Horizon Energy directors have urged the Eastern Bay Energy Trust to advise its intentions well before the October 29 deadline for acceptance of the offer so that other shareholders can take appropriate action before that date.
Marlborough Lines said it had received almost 5% acceptance of its offer from Horizon Energy shareholders, which represents a 34% premium over the target’s pre-offer trading price.
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