COMMERCIAL Review Of Week’s Stock Exchange Transactions

Press, Volume CV, Issue 31060, 16 May 1966, Page 18

COMMERCIAL Review Of Week’s Stock Exchange Transactions

On a clear day you can see for ever, but in a take-over battle it is sometimes necessary to see much further than that—and the latest United Empire Box move underscores this point. There should be some sharp market reaction today to the announcement late on Friday that United Empire Box had raised its bid for Ross and Glendining by 2s a share in cash.

Most certainly those Ross and Glendining shareholders still taking profit last week—with sales down to Ils lOd mid-week—did not expect that there would be any increase in the bid.

They obviously relied on the statement in the letter from their directors that U.E. Box was not prepared to better its terms. Because of this many of them have been getting out in case the bid does not succeed. Also they under-estimated the determination of Mr J. N. C. Doig, chairman of U.E. Box, to break into the wool and textile industry to diversify his organisation. Mr Doig has said from the start he is confident U.E. Box would be successful in an industry that “could and should be more profitable.” His readiness to reinforce his confidence with a higher cash offer should clear up any doubts Ross and Glendining shareholders may still have. This confidence should also rub off on those U.E. Box shareholders who are still wondering if the company is heading in the right direction. Good Timing Mr Doig’s sense of timing has been admirable all along, and Friday’s announcement came at the end of a week of minor incidents in which he was involved. None of these incidents seemed important in itself, but together they may mark the turn of the tide in the take-over battle. Early in the week the Dunedin City Council at its meeting seemed to feel that it would be a bad thing for Dunedin if the U.E. Box offer were accepted. This again raised the prospect that U.E. Box would move the Roslyn mill from Dunedin. But Mr Doig was quick to reiterate that there was no question of the mill being moved. It is Mr Doig who is on the move. Later in the week he was in Dunedin looking at the mill and talking to Ross and Glendining directors.

After seeing the mill and talking to the directors he announced that U.E. Box would lift its bid because “we now feel confident we can make much better use of the assets than originally expected.” His reappraisal came just at the time when the market in Ross and Glendining shares showed signs of weakening. Now the U.E. Box offer is worth £332,500 more it is up to Ross and Glendining shareholders to think again about their position. U.E. Box already holds more than 20 per cent of R. and G. shares and this is also well worth consideration. Blunt Words Blunt words came from Melbourne last week in a report by Mr Peter Murphy, Q.C., on the activities of the Korman group of companies. Timing of the release of his report was probably fortuitous in New Zealand, coming as it did soon after the news that Factors—a Korman organisation—planned to sell Holeproof N.Z. It has been suggested that Mr Murphy intended to establish “a more informed and questioning climate of general opinion on the proposal and its background.” Mr Murphy condemned the activities of the Korman family, saying “not merely mismanagement was involved, but also misfeasance—breach of trust and dishonesty.” After the news of Mr Murphy’s report came the announcement that the sale by Factors of Holeproof N.Z. had not been ratified because conditions of the sale had not been fulfilled. Green Light Shareholders of Enzlon last week gave their directors the green light to go ahead with investigations to form a new company to take . over the Shannon nylon plant.

The 150 shareholders who went to the meeting learned that in nine months of production the company had lost about £400,000. This staggering loss must be coupled with current liabilities at the end of April of more than £500,000. No newly-formed company could start in business by writing off almost £lm. It is also difficult to see who would be interested in buying shares in any new organisation set up to carry on the Shannon plant. Buying Rush There is hardly likely to be the buying rush that marked the floatation of the original company. Enzlon directors, somewhat hopefully, said they had hoped that some big New Zealand company might make a take-over bid to keep Enzlon on its feet. One wonders if they had any particular company in mind. Set-backs on the New Zealand share market last week reduced the value of many stocks, among them leading issues' There was a steady retreat on every trading day, but the momentum was checked slightly at the close. Trading was moderate on the week and turn-over was down on the week before. Market Down The market showed nearly five falls to every two rises. This was the trend in both the New Zealand and overseas lists. Breweries were weaker with fails by Dominion, New Zealand and Taranaki, but Westland gained 2s to 40s. Insurances weakened again. National, New Zealand, and South British all lost ground. Textiles were variable, but Alliance and Lane Walker improved. Loan and agency stocks were weaker. F.A.C, N.A.F., and Wright, Stephenson were marked down. New Zealand Forest Products advanced on higher profit and dividend news. Tasman rose in the wake of the announcement. Upsetting news from Wall Street and London was reflected in Australian trading last week and in turn on New Zealand stock exchanges.