Where to for SEA takeover?

Chris Hutching

Friday 30th April 2004

Trans Tasman Properties minority shareholders have been vindicated in their rejection of the paltry takeover offer by Hong Kong-listed 60% shareholder SEA Holdings.

An independent report by Ferrier Hodgson & Co says that the 40c a share offer from SEA is neither fair nor reasonable. Ferrier Hodgson values the shares between 50c a share to 57c a share.

As a result the independent directors of Trans Tasman Properties, Messrs John Ferner and Carl Peterson, have recommended that shareholders do not accept SEA's offer.

A minority shareholder, Peter Rae, said he considered a reasonable price would be 53c, which would be a 15% discount to net asset backing of 63c a share. A 15% discount had been a common feature of other recent takeovers.

Rae said that if a takeover was successful at 53c a share there would still be a transfer of wealth to SEA of about $24 million, plus the value of tax losses. These could be almost as much again, which would be a pretty good outcome for SEA .

He would also see assurance from the Trans Tasman independent directors that all costs incurred by Trans Tasman relating to the takeover would be recovered from SEA, as provided in the Takeovers Code.

Minority shareholders are awaiting the next move from the Asian shareholders of SEA. Some of them are concerned that a revised offer closer to the fair range might shake out some weak sellers and allow SEA to buy sufficient shares (75%) to vote a change of domicile that would see the company moved offshore in the same way that control of Richina and BIL has moved to Asia. The Takeovers Panel is understood to have been asked to clarify the rules relating to such a scenario. On the other hand the implied threat may simply be another ploy to winkle out weak sellers.

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