NZ raider Hart keen to fly solo
Rod Myer
August 23, 2006
Hart, New Zealand's most prominent corporate raider since the 1980s glory days of Sir Ron Brierley, will take his empire private following a bid for minorities in Burns Philp.
Mr Hart's privately owned Rank group has bid $1.10 a share for the 42 per cent of Burns Philp it does not already own, a premium of 10 ¢ a share on where it was trading a couple of days before the offer.
The initial response to the offer was good, with 20 million Burns Philp shares changing hands and the share price closing up 0.5 ¢ at $1.09 on the day. An analyst observed that there was no impediment to the bid. "I assume it will be successful," the analyst said. "He's saying: 'I'll give you $1.10 for every $1'."
Rank came out with news of the bid in response to an inquiry from the Australian Stock Exchange about price movements in Burns Philp, which rose about 6 per cent on Monday.
Burns Philp is one of Australia's oldest listed companies.
In more recent times it has been the public vehicle for Mr Hart's signature white-knuckle, extreme-sport approach to corporate raiding. That approach turned him from a tow-truck driver into New Zealand's richest man with an estimated fortune of $2 billion.
Mr Hart now feels he can achieve his ambitions without a conduit to the sharemarket. Yesterday Rank group said it had been giving careful consideration about operating both a private and a publicly-listed company. "On balance we have concluded that it is timely to consolidate into one private structure."
Burns Philp, after troubles in the 1990s, has now sailed into calm waters. It cashed out $5 billion of Hart-era investments and its assets now consist of $2.4 billion in cash, a stake in Goodman Fielder, and a few sundry exposures.
To control Burns Philp, Mr Hart will effectively outlay $1.3 billion and end up with $1.1 billion in cash.
Arthur Lim, research chief with Macquarie Equities in New Zealand, said the offer looked positive for Burns Philp. He said shares had drifted to 90 ¢ in recent months because shareholders feared Mr Hart might lead it on a high-risk venture.
Burns Philp surprised the market in 2003, paying $2 billion for food group Goodman Fielder, a company twice its size. Late last year Mr Hart sold Goodman at a tidy $200 million profit.
But Mr Lim said Mr Hart appeared to be gaining confidence and was likely to be finding the difficulty of carrying shareholders along with him on his raids not worth the effort.
It was significant that he had chosen to carry out his $3 billion takeover of Carter Holt Harvey last year through Rank rather than Burns Philp. "Graeme Hart prefers to deal outside the public limelight," Mr Lim said.
Ratings agency Standard & Poor's placed Burns Philp on credit watch following the offer yesterday.
theage.com.au
http://www.theage.com.au/articles/2006/08/22/1156012541952.html