Brierley Inv. says “Don’t accept, wait”

Press, Volume CXI, Issue 32587, 22 April 1971, Page 16

Brierley Inv. says “Don’t accept, wait”

(New Zealand Press Association) WELLINGTON, April 21. R. A. Brierley Investments, Ltd, has sent a circular letter to the shareholders of John Duthie Holdings, Ltd, urging them not to accept the offer of Scott Group, Ltd, for their shares but to wait and accept the Brierley offer.

The letter is not the formal offer from Brierley Investments, it says that share-

holders will receive this at the end of April. The Brierley letter, over the signature of the executive director (Mr T. J. N. Beyer), emphasises that the Brierley offer is a cash offer whereas the Scott offer is a “scrip offer of uncertain value.”

Mr Beyer quotes Scott’s circular to the Duthie shareholders as saying that in accepting the Scott offer Duthie shareholders would give up an 8c annual dividend for every Duthie share, and acquire a 10c annual dividend for every two Scott shares. Mr Beyer says that Brierley’s offer of 180 c a share, provides a choice of what to do with the proceeds, but if the proceeds were invested in short-term debentures, at 7j per cent, the shareholder would receive 13.87 c annual income a share.

“Scott’s state that the market value of their offer is 220 c a share on the basis that their shares were traded at 110 c at the time of their offer,” Mr Beyer said. “The earning rate on Scott’s ordinary capital, based on the combined earnings of Scott’s and Duthie’s from their last annual accounts, would fall from 28.59 per cent to 19.36 per cent. This woulld surely be reflected in the market value of Scott’s shares. “At 110 c a share the shares give a yield of 4.55 per cent.

“A more realistic yield in line with similar companies whose shares are traded on the stock exchange would be 6 per cent “This places a value of 83c on each Scott share, and makes their offer worth 166 c plus an interim dividend of 2c, making 168 c in all,” Mr Beyer said.