Marlborough Lines takeover scuppered by Horizon Energy's major shareholder

Tuesday 20th October 2009

Marlborough Lines Ltd., the Blenheim-based lines company, has had its takeover bid for network operator Horizon Energy Distribution Ltd. scuppered by the company’s major shareholder.

Easter Bay Energy Trust, which owns 77% of Horizon, today advised the company it will reject Marlborough Line’s offer to buy 51% of their shares at $3.96 apiece.

The bid was made on Sept. 29, and is due to close on Oct. 30. Horizon chairman Rob Tait said the trust referred to the ownership review undertaken last year and its decision not to go ahead with any merger or sale of its holding. Last week, Horizon’s board came out swinging at the offer, saying it lay “at the bottom of the valuation range by the Independent Adviser” of $3.96 to $4.68.

The board of trustees was completely overhauled in trust elections earlier this month. The shares were unchanged at $3.40 on the NZX and have climbed 8% in the past year. Marlborough Lines chief executive Ken Forrest questioned the veracity of the company’s valuation, and said the directors had failed to deliver on promises to grow profit.

The original offer was a 34% premium on the $2.95 share price before the bid was announced. The day before the offer, Horizon had issued an updated profit forecast raising profit expectations this year to $6 million from $4.5 million, due to one-off factors including a cold winter, and was unlikely to prove sustainable.

Horizon is one of 28 electricity network companies operating regulated regional electricity line monopolies. The sector has seen a number of consolidation plays over the decade since they were divested of retail electricity customer bases. Marlborough Lines has 50% holdings in the OtagoNet and Nelson networks.

Businesswire.co.nz

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