No increase in Contact takeover price

By Phil Boeyen, ShareChat Business News Editor

Wednesday 21st November 2001

Edison Mission Energy is extending the deadline for its current takeover bid for Contact Energy (NZSE: CEN) but has ruled out any increase in the bid price.

The Contact cornerstone shareholder says its offer will now close on February 3 next year, the last possible date under takeover rules.

EME spokesperson, Bob Driscoll, says the extension recognizes the logistical difficulties of reaching 121,000 individual Contact shareholders, and will provide more opportunity for them to evaluate and respond to the offer.

"By law we cannot extend the offer beyond 3 February next year. If we do not achieve 90% of the Contact shareholding by this deadline, the offer will lapse."

There has been considerable market speculation that EME's offer for Contact will fail because major institutions consider the offer of $4.14, plus a recent dividend of 11 cents, undervalues the business.

EME has already raised its bid price from the original offer of $3.85 a share and Mr Driscoll says the price will not be raised further.

"Our offer is a good one, and is fair. We have made our offer and are prepared for Contact's shareholders to make their assessment of its merits.

"We have done this mindful of the emphasis the new Takeovers Code places on the rights of small shareholders. We are well aware that every investor has money at stake."

Mr Driscoll is also at odds with those who interpret the current Contact price as evidence the company's bid will fail.

"I would have thought that a more relevant interpretation for retail holders is that the current share price is an indication that the market does not believe the over-inflated valuations that some brokers have placed on Contact shares."

All Contact shareholders will be sent a letter this week advising the change in the offer period and reminding them that it has been recommended by the company's independent directors.

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