Vavasseur withdraws merger opposition

Press, Volume CXII, Issue 32848, 23 February 1972, Page 1

Vavasseur withdraws merger opposition

<Neu> Zealand Press Association)

WELLINGTON, February 22.

The British finance firm of J. H. Vavasseur and Company announced tonight that it would not “actively consolidate opposition” to the NMA-Wright Stephenson merger or attempt to vote its NMA shares and those of its associates against the merger.

It said in a statement released late today: “It is more than probable that by canvassing substantial shareholders in both New Zealand and the United Kingdom, and obtaining their support, Vavasseurs could thwart the merger.”

But the company said there were a number of practical considerations against such a move.

Vavasseurs said that the company had consistently maintained its wish to

develop a constructive attitude towards NMA by aiding the company to expand into other financial areas while maintaining NMA’s pastoral finance activities. “If Vavasseurs is unable to achieve this due to the actions and wishes of the New Zealand Government, then opposition to the merger could be harmful to NMA’s future," the statement said. The statement made the following points:

1. Vavasseurs and its asso- 1 ciates have held a consider- : able number of shares in NMA since 1970. Vavasseurs manages a number of investment and unit trusts; and NMA shares have been attractive investments for those trusts, particularly in view of the high yield and asset value. A certain amount of play has been made in New Zealand official statements as to the secret procedure alleged to have been used by Vavasseurs in purchasing these shares, in particular the fact that nominee names have been used. Vavasseurs wishes to point out that so far as unit trusts are concerned, neither Vavasseurs nor its management subsidiaries has any say at all as to the names in which the shares are registered (this is a decision for the trustees). As far as investment trusts are concerned it is by far the most common practice in the City of London to register shares in nominee names for administrative reasons.

2. In September. 1971, Mr J. G. Pinckney (a director of Vavasseurs), after a visit to New Zealand wrote to the Reserve Bank giving an outline of the type of activity into which Vavasseurs might like to see NMA expand. This letter was not, nor did it set

out to be, a detailed plan of action: it was rather an outline of the activities into which NMA could possibly be expanded to give it a broader base. It was emphasised that this expansion would be neither a withdrawal from, nor to the detriment of, existing pastoral finance activities. Mr Pinckney also expressed the view of Vavasseurs that if it was the intention to make a bid for NMA it would be deemed desirable that New Zealanders should retain, if they so desired, a major proportion of the equity of the company. Subsequently the Reserve Bank replied to Mr Pinckney’s letter saying that “the acquisition of NMA does not require the consent of the New Zealand Government in the of the Overseas Take-overs Regulations, 1964. However, if the acquisition did proceed, the company

would require official approvals for many of the expansionary moves it wishes to undertake in New Zealand and the Government may be reluctant to give the required consents.” Thereafter, until January 20, 1972, Vavasseurs acquired very few more shares in NMA and regarded NMA only as a long-term investment

3. On January 20, 1972, the proposed NMA-Wright Stephenson merger was announced. Vavasseurs then considered, and.still does consider that the terms are not adequate for NMA shareholders bearing in mind NMA’s cash flow, its asset backing and its potential as an independent company after rationalisation. Vavasseurs has made its opposition to the proposed merger known to the members of both the NMA and Wright Stephenson boards; and has stated that, rather than see NMA absorbed into Wright Stephenson, it would prefer to see NMA remain independent. To protect its minority interest and to give itself a stronger voice in the debate about NMA’s future that was certain to ensue, Vavasseurs purchased further NMA shares in both London and New Zealand. It was not its intention to gain control of NMA. It was its wish—and its right as a substantial shareholder —to protect its investment in NMA.

4. On February 2, Mr G. A. Thomas, a Vavasseur director, called on Mr Muldoon and subsequently wrote him a letter setting out his understanding of their conversation. In his reply, which was received on the morning of February 3, Mr Muldoon made it clear that the Government was opposed to an acquisition by Vavasseurs of a major shareholding in NMA. After receipt of this letter, no further shares were bought by Vavasseurs. 5. On the afternoon of February 3, the New Zealand Government forbade sales of NMA shares by New Zealand residents to Vavasseurs and cancelled retrospectively contracts made on the New Zealand Stock Exchange on that and the previous day between vendors and Vavasseurs.