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Haier signals takeover of F and P Appliances

Monday 10th September 2012

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Fisher & Paykel Appliances says 20 percent shareholder Haier of China has indicated it may offer to buy the whole company and has approached three other major investors.

No price was given for the possible takeover, which Auckland-based F&P Appliance said would represent a premium to the current share price. It was described as a potential cash offer subject to conditions.

Shares of the manufacturer of ovens, fridges and dishwashers have soared 108 percent this year and last traded at 75 cents, valuing the company at $543 million.

Haier has asked to undertake limited commercial and financial due diligence and the target company subsequently provided an extract from its five-year strategic plan. That was released today after Haier advised F&P Appliances that it would approach three of the largest shareholders over the weekend regarding the possible takeover offer for the company.

Among the F&P's biggest shareholders is Orbis Investment Management with 17 percent, Accident Compensation Corp with 7.5 percent, and AMP Capital Investors with 5.2 percent, which would bring Haier within reach of a 50 percent controlling stake.

The strategic review gives a forecast for 2013 capital expenditure of about $42 million while net debt will be "well below the $65 million as at March 31 this year, excluding the finance business.

The Chinese company injected much-needed equity in F&P Appliances as part of a $200 million rights issue in 2009 when the New Zealand company was forced to raise funds to repay bank debt. Since then, the local company has taken over distribution of Haier products in Australia.

The company reiterated its forecasts given in August for full-year operating earnings before interest and tax would be $70 million to $78 million, made up of ebit from Appliances' of between $35 million and $40 million and earnings from Finance of $35 million and $38 million.

The company's strategic review shows a concerted push to monetise licensing of its technology including its direct drive motors and compressors.

It gave a 2017 target for earnings in North America rising to US$20 million on an ebit basis from about US$1 million in 2012.

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