Fisher & Paykel Chairman Tells Shareholders Don't Sell - Yet
Chinese white goods company Haier’s $705 million offer for its New Zealand partner Fisher& Paykel Appliances is tempting given slowing demand for its products, but Keith Turner, Chairman of Fisher & Paykel, says shareholders should not accept the offer, just yet.
"Our advice to shareholders at this time has been don't sell, we'll provide a recommendation when we've received an independent expert's valuation range," Turner told CNBC’s “Cash Flow”on Wednesday, a day after the bid.
In a statement to the New Zealand stock exchange on Tuesday, Fisher & Paykel said that Haier had offered to buy all of the shares it doesn't currently own in the New Zealand kitchen and appliance maker for NZ$1.20 ($ 0.98) a share. Haier already owns 20 percent of Fisher & Paykel.
The offer represents a 14 percent premium to Fisher & Paykel's closing price on Tuesday. On Wednesday the stock jumped 12 percent in Wellington to NZ$1.165 as investors reacted to news of the takeover bid.
Turner said that while the board is “supportive” of Haier's bid, its backing is subject to whether the independent advisor's report, which is due to be released in October, shows the price is right.
"We are here to look after all shareholders not just Haier. Our support of the offer at this point is conditional on that NZ$1.20 being in the adviser's range and no further better offer than this coming along," he said.
The takeover offer is also dependent on approval from New Zealand's foreign investment watchdog, the Overseas Investment Office (OIC) and the Reserve Bank of New Zealand, the country's central bank.
Turner said that while he did not want to pre-judge the outcome of either body's decision, he doesn't foresee obstacles to Haier's offer.
"The sort of things that the OIC has been sensitive to in the past has been land, Fisher & Paykel is not a land-holding company so we don't think that’s going to be an issue," he said.
Qingdao-based Haier has already got Fisher & Paykel's second biggest shareholder, fund manager Allan Gray Australia, to sell its 17.46 percent stake to Haier.
Simon Marais, CEO of Allan Gray Australia told CNBC that he believed the deal would be good for Fisher & Paykel.
"Fisher & Paykel have got a fantastic business... their problem has been they're a subscale company, Haier would make an incredible match," Marais said.
For the fiscal year ended March 31, 2012, Fisher & Paykel reported revenues of more than $720 million compared to Haier’s $23.3 billion for 2011.
When Haier bought its $50 million stake in Fisher & Paykel in 2009, the deal gave it access to Fisher & Paykel's marketing and research and development. The Chinese firm also received rights to sell the New Zealand firm's products exclusively in China.
By CNBC’s Roshan Vaswani