Review Of Week’s Stock Exchange Transactions

Press, Volume CV, Issue 31031, 11 April 1966, Page 13

Review Of Week’s Stock Exchange Transactions

. Just for a little while last week it looked as if United Empire Box shareholders were voting with their feet on the merits of the take-over bid for Ross and Glendining, but the Easter break came before it could be seen if an exodus had really’ started.

News that U.E. Box was planning a “major and sustained entry” into woollen manufacturing seemed to shake some of its shareholders. They acted on the maxim: when in doubt, get out, but it could be they moved too soon.

Confirmation that the bid had been made found U.E. Box swinging on a see-saw with Ross and Glendining, as the market collected its thoughts next day on the proposed deal.

Uncertainty as to whether the offer will be accepted is shown in the difference in price of the two shares. Oddly enough, the directors of R. and G. have had nothing to say about the offer, although they have had plenty of time to weigh its merits. Formal notice of the offer should have been received by R. and G. on Thursday, but this has not been confirmed. Formal Notice Under the 1963 Companies Amendment Act U.E. Box directors have to wait for a least 14 days after sending the formal notice before approaching R. and G. shareholders! direct. In the 14 days R. and G. directors must write to U.E. Box saying what they recommend. This statement must be included in the take-over offer if it is sent to R. and G. shareholders by U.E. Box. The act also requiries R.j and G. directors to write to their own shareholders. They must tell them if they have any financial interest in U.E. Box, and if so how much, what they recommend and if directors intend accepting the offer for their own shares. They must also tell shareholders the highest and lowest quotations of Ross and Glendining shares in the days immediately before the offer became known.

Capital Value They are also responsible i for letting shareholders know! the capital value of all the! , company's land and buildings, and “whatever information is available” on U.E. Box plans! for existing Ross and Glend-| Ining staff. One of the reasons for the! silence of the R. and G. directors could be that they were! shocked to find themselves on the receiving end of a takeover bid. Other reasons are that they ; could be contemplating re-j jecting the offer or they mavi be waiting to see if there is! likely to be a counter offer. ! However, chances of a counter offer are slim because the[ firms outside the textile in-1 industry big enough to! handle such a deal are busy! with their own problems just) now. There is little chance of any[ offer coming from within the! industry. “Giants” Ross and Glendining is one! of New Zealand's textiles | “giants"—the second biggest’ organisation in the industry and 21st on the list of all industrial companies. Only two other textile firms can be compared to Ross and Glendining: Felt and Textiles (N.Z.)—the largest in the in-'

dustry—and Holeproof Industries, but both are subsidiaries of overseas companies. Holeproof is being reorganised into a New Zealand company and Feltex is busy on a programme of internal development and rationalisation. Alliance, Kaiapoi-Petone and Lane Walker Rudkin, ranking 44, 45 and 46 among New Zealand industrials, would have to combine to match the strength of U.E. Box. This means that consideration must be limited to the U.E. Box offer. Acceptance or rejection may depend on the attitude of Ross and Glendining family interests in Dunedin. Backing Much has been said of the asset backing of 19s for each R. and G. share, but this is over-simplification. The value of assets depends on their utility and profitability. The attitude of U.E. Box is shown by its already having options on “a considerable quantity of the world’s latest manufacturing machinery and equipment.” This was said in a statement by the company last week and seems to indicate confidence by U.E. Box in the outcome of its offer. Last week’s market made it seem that some U.E. Box shareholders had fears about dilution of the stock and doubts about what seems to be a change in direction, although the company has made initiial forays into textiles.

But if the offer is accepted U.E. Box will be the sixth largest industrial organisation in the country.

Good Team

U.E. Box has a talented management team and the prospects for New Zealand industry must have been carefully weighed before this move was decided on. A U.E. Box textile division, taking in R. and G., would be the largest in the country and very- well integrated. Technical advances at New Zealand Combing Development show the promise of the U.E. Box management.

U.E. Box has already acquired 180.000 Steele’s Carpets shares for a consideration of 540,000 U.E. Box shares cum dividends and £13.500 cash and minority shareholders are being offered the same terms. Steele's shares sold at Auckland last week for 30s, putting a value of 10s 6d on a U.E. Box share. The payment to Ross and Glendining would be 3.325,000 5s shares and £498,750 in cash and to Steele’s 1,050,900

shares and £26.272 10s cash, a total of £525.022 10s in cash. U.E. Box's paid up ordinarycapital would be lifted to £3,228,000. Timid Approach While the Australians are getting into the swing of using dollars and cents the approach by some New Zealand authorities seems to get increasingly timid. So far there seems to be little real attempt at educating people for the change to the new currency, although it is little more than a year away. Some stores have halfheartedly attempted dual pricing, but more as a sales gimmick than any serious attempt to mould decimal-currency thinking. Obviously there will be no going back to pounds, shillings and pence once the change comes, so everyone must be weaned as quickly as possible, ready to use dollars and cents. Last week the chairman of the Decimal Currency Board (Mr S. L. Moses) said it would be impossible to change to decimal currency overnight. Mr Moses, not long back from Australia, hinged his argument mainly on the conversion of cash registers. There seems to be a feeling that the change to decimal currency in New Zealand is bound not to go smoothly and that there is nothing that can be done about it. Any New Zealander suddenly finding himself in New’ York or Singapore soon adjusts to using dollars and cents and. most important, relating to the amount of money he has to spend. Woolworths in Australia

demonstrated how retail trading could be switched to decimal currency with speed and efficiency.

There was no inconvenience to customers, nor any disruption of trade when Woolworths made the change in 115-stores in every Australian state.

All the old pounds, shillings and pence cash registers were removed and 1600 decimal registers installed in their place on February 14 when the Commonwealth changed to the new currency. This must have needed very

careful planning, but if an Australian retailing organisation can do it there seems to be no reason why it cannot be done in New Zealand. Changing to a new currency is a major operation and planning for the replacement of cash registers should be well ahead by now. It is not enough to say that an overnight change is impossible. Perhaps we should take heart from the comments of the Under-Secretary of Finance (Mr Muldoon), who says the change to decimals will be “painless” and “fun."