Company Newt KAIAPOI OFFER

Press, Volume CII, Issue 30041, 28 January 1963, Page 14

Company Newt KAIAPOI OFFER

Merger Is Aim

(NX. Press Association) WELLINGTON, Jan. 26. Commenting on the offer made by Kaiapoi to the Wellington Woollen Manufacturing Company, Ltd., the chairman of directors of Wellington Woollen (Mr W. S. Wheeler) said today that the basis of the offer was fundamentally a merger, not a •ale of assets. Mr Wheeler said: “The directors consider this method in the best interests of shareholders whereby they retain their interest in the high asset backing of their shares. “In the discussions between the boards of the two companies, each company was fully informed of the value of reserves of the other. These factors were taken fully into account in settling the basis of the proposed merger. "The net assets to be contributed by Wellington Woollen Company to the merger, on a basis of full revaluation of all land and buildings and taking into account all reserves, amount to approximately 50 per cent of the whole. Combined Profits

“However, Wellington Woollen Company contribution to the combined profits of the two companies over the last five years has been 36.5 per cent, whereas Kaiapoi’s contribution was 63.5 per cent “Thus the merger terms which result in Wellington Woollen shareholders having a 45.2 per cent, share of the ultimate capital should be considered satisfactory. “The possibilities of rationalism and increase of production in a competitive market full utilisation of plant, and savings in costs of distribution become possible by merger with a company of similar interests, so that the earning capacity of the companies will be increased.

“On the basis of the present rate of dividend paid by Kaiapoi, the income of Wellington Woollen Company shareholders would increase by over 60 per cent. In view of these facts, the directors considered it in the best interests of the shareholders to recommend their acceptance of the offer,” he added.