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Haier bid for F&P Appliances too low for AMP Capital

Monday 15th October 2012

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Chinese manufacturer Haier's bid to take control of whiteware maker Fisher & Paykel Appliances is too low and it wants to be paid full value for its stake, according to a local fund manager.

AMP Capital Investors (New Zealand) portfolio manager Douglas Lau says the fund manager wants full value for its 5.4 percent stake in F&P Appliances, and that Haier's $1.20-a-share offer is too low. Lau wouldn't comment on what AMP Capital sees as fair value, as that's currently up for negotiation, but the independent valuation report put the shares in a range of between $1.28 and $1.57.

"It doesn't make sense to accept the Haier offer as it stands when you can sell on the market at a higher price," Lau told reporters in Wellington. "It needs to be above the current offer. Who captures some of the synergistic gains and where full value lies is something that's currently in negotiation."

Haier's offer values F&P Appliances at about $869 million, a 39 percent discount to the $1.42 billion enterprise value estimated by a consensus of four analyst recommendations compiled by Reuters.

The Chinese firm has already secured agreement from Allan Gray Australia to sell its 17.46 percent holding into the offer, giving it a total of about 37 percent, though local fund manager Tower Investments, which holds a 3.6 percent stake in F&P Appliances, panned the bid.

Shares in F&P Appliances fell 0.8 percent to $1.22 in trading today, a 1.7 percent premium to the Haier offer price.

Haier effectively rescued F&P Appliances in 2009 when it acquired a 20 percent stake as part of a capital raising that let the company refinance its debt. The local manufacturer got distribution into China as a result of the deal and the ability to further licence its technology.

The cash offer represented a 63 percent premium over F&P Appliances' stock price of 75 cents, before Haier disclosed its interest.

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