NZ whiteware maker advises against Haier takeover

WELLINGTON -- Independent directors of one of New Zealand's oldest whiteware makers Thursday unanimously recommended that shareholders turn down a takeover offer from Chinese giant Haier.

Keith Turner, chairman of the independent directors of Fisher & Paykel Appliances Holdings Ltd, said the board had carefully considered a full range of expert advice, including an independent adviser's report.

They agreed that Haier's offer of NZ$1.20 (99 US cents) per share did not adequately reflect their view of the firm's value based on their confidence in its strategic direction.

"We note that the Independent Adviser's opinion is that the full underlying value of FPA shares is in a range of 1.28 to NZ$1.57 per share," Turner said in a statement.

Haier Group responded by telling Fisher & Paykel Appliances shareholders they would need to decide between the certainty of Haier's offer or taking a significant risk on the achievability of the independent adviser's valuation range.

A statement from Haier Group, which already owns 20 percent of Fisher & Paykel Appliances, said the offer price was a significant 60 percent premium to Fisher & Paykel Appliances' share price at the close of trading on Sept 7, the last trading day before the market was advised of the potential takeover offer.

Haier believed there were significant risks in the achievability of the independent adviser's "overly optimistic" valuation range, which was substantially weighted on Fisher & Paykel Appliances' five-year strategic plan.

"There is a high degree of risk regarding the implementation of the five-year strategic plan and achievement of the goals set out in it," Liang Haishan, chairman of Haier New Zealand Investment Holding Company Ltd and president of Haier White Goods Group, said in a statement.

"In determining the offer price we have applied our significant, first-hand knowledge of Fisher & Paykel Appliances and the highly competitive global white goods sector, together with a consideration of the economic environment Fisher & Paykel Appliances operates in."

He also reminded shareholders that Allan Gray Australia, holder of 17.46 percent of Fisher & Paykel Appliances shares, had an irrevocable agreement to accept the proposed offer, which represented a strong endorsement of its value.

Liang warned that if Haier's offer failed or if Haier did not receive sufficient acceptances to enable it to invoke a compulsory acquisition, the share price would likely see "a large decline" from current levels.

Prior to the announcement of Haier's offer, the Fisher & Paykel Appliances share price had been below the offer price since Sept 22, 2008, and traded as low as 33 NZ cents in the past 12 months.

Based in Qingdao, Shandong province, Haier Group employs more than 80,000 people around the world and had global revenues of $23.3 billion last year.

Haier acquired 20 percent of Fisher and Paykel Appliances in 2009, establishing cooperation agreements in research and development, sourcing, manufacturing and marketing.

Fisher & Paykel Appliances Holdings, the parent company of Fisher & Paykel Appliances and Fisher and Paykel Finance, is listed on the New Zealand and Australian stock exchanges and employs more than 3,300 staff worldwide.

Established in New Zealand in 1934 and first listed in 1979, the company has been manufacturing plants in New Zealand, Italy, Thailand and Mexico.