GPG bids 75cps for control of Rubicon

By NZPA

Wednesday 28th August 2002

Sir Ron Brierley's Guinness Peat Group said today it was offering 75 cents per share for 40 percent of the outstanding stock of Rubicon, which would give it majority control.

The conditional offer, which is worth $67 million, values Rubicon, owner of 17.6 percent of Fletcher Forests, at $209 million.

GPG, which snared 19.9 percent of Rubicon in a raid last month, said as an alternative to winning 50 percent control, it would seek the approval of Rubicon's shareholders to lift its stake in the company to at least 30 percent.

GPG said its move was designed to consolidate the forestry industry.

GPG's New Zealand director Tony Gibbs said the company had similar motives to its recently announced merger of pipfruit marketing company Enza with produce wholesale Turners and Growers.

Rubicon is the largest single shareholder in the country's second largest forest owner, Fletcher Forests. That holding is key to Fletcher Forests' efforts to raise capital for another bid for the Central North Island Forests Partnership (CNI), a 163,000-hectare pine plantation with three sawmills next to its own.

Mr Gibbs said that rather than using the word "consolidation" which was used in GPG's statement, he was looking for a co-ordinated approach to selling New Zealand's forest products.

Fletcher Forests chairman Sir Dryden Spring was on record as wanting the same, he said.

Asked if the mega dairy company Fonterra was the model, he said: "Not really. We are talking about New Zealand's world class forestry assets and some industry co-operation."

Rubicon's directors will make a statement on the offer before the resumption of trading in the stock, the company said.

GPG is locked in a legal battle with US hedge fund Perry Corp, which last month lifted its stake in Rubicon to 15.98 percent from 4.9 percent.

Unlike Perry Corp, GPG opposed the purchase by Fletcher Forests of CNI. That deal would have seen Rubicon paid an effective 37 cents per share for its Fletcher Forests shares, which would have gone to China's Citic, against the then prevailing price of around 25 cents.

Asked if Citic figured in futures plans, Mr Gibbs said: "I wouldn't think so."

Initial broker reaction was that GPG's offer was pitched too low and would receiver little institutional support.

Brokers said net tangible assets were above 80 cents.

When GPG swooped to grab its initial stake in Rubicon, Macquarie Equities senior analyst Arthur Lim said the deal was a classic Sir Ron Brierley play of buying undervalued assets. He valued Rubicon at 90 cents/share if the CNI deal did not proceed and at $1/share if it did.

Sir Dryden earlier this month said Fletcher Forests' strategic options would be limited until Rubicon decided whether it wanted to be a long-term forestry investor or not.

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