Forum Archive Index - August 2002

["Gerald Dreaver" <gdreaver@paradise.net.nz>]

I'm interested in other FFS shareholders' views on this deal. Frankly, I'm
annoyed at the attempts of Xylem and the Shareholders' Association to drag
this deal down.

I was distinctly unimpressed by the Xylem missive that arrived in my mail
today. One of Xylem's arguments that the price being paid for the CNIFP
assets is too high is that it "does not reflect the full strength of FFS's
negotiating position as the natural purchaser of the CNIFP assets".

I'm sure that it's true that the assets are worth more to FFS than to most
other potential purchasers. Ownership of the assets will provide savings in
scale and haulage, given the proximity of the other major Fletcher forests
and mills. This is reflected in analysts' estimates that acquisition would
add 10 cents to the FFS share price. But if FFS is the natural purchaser,
this means they should "naturally" prepared to pay MORE than anyone else,
not less. This gives the Receiver a strong negotiating position, not
Fletchers. There has been a trickle of offers in the vicinity of US$650m,
and I see no reason why this should not continue, especially if the
currently proposed deal falls through.

It's ironic that, while saying that the deal is overly generous to Rubicon,
Xylem present in evidence a commentator (Brian Gaynor) who thinks it's a bad
deal for Rubicon shareholders. Can both of these be true? Perhaps, because
Gaynor seems to think that shareholders should make their decisions on the
basis of patriotic sentiment rather than rational analysis. Never mind that
rational analysis by all shareholders would serve the country better.
Personally, I consider that Dryden Spring, who happens to be the guy several
large companies trust with directorships and who I presume has a reasonable
shareholding of FFS shares himself, is taking a rather more rational
approach to this situation than Xylem.

Regards,

Gerald Dreaver
Wellington


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