U.E.B. surprised in 1966

Press, Volume CXII, Issue 32874, 24 March 1972, Page 10

U.E.B. surprised in 1966

(By the commercial editor) When U.E.B. Industries, Ltd—then called United Empire Box, Ltd—successfully acquired Ross and Glendining, Ltd, in 1966, the company moved into an industry of which it had no previous experience.

U.E.B. yesterday announced a bid for Blundell Bros, publisher of the “Evening Post.”

Among the reasons given in 1966 by U.E.B.’s chairman (Sir James Doig), for dramatic diversification were a surplus of management talent a surplus of cash resources, coupled with the fact that the company had run out of opportunities for expansion in the packaging industry. Many people, including U.E.B. shareholders, had misgiving about the bold move, but the company dispelled all doubts bv making a great success of it. Following an intelligently conceived strategy of rationalisation and further acquisitions, U.E.B. won for itself a major position in the New Zealand carpet industry. The company is very profitable. and generates a large cash flow, and still seems to have plenty of management talent In fact all the reasons applying in 1966 would apply in 1972. It has long been rumoured that U.E.B. was interested in entering the communications field. The company was a party in the application for a second TV channel—since withdrawn.

There have also been rumours about approaches to Dunedin’s •'Evening Star,” and Whitcombe and Tombs. As these companies are public, and could be acquired by simply making an offer to shareholders, the rumours were probably no more than just thatWhether the offer by U.E.B. for the “Evening Post" will be successful is another matter. It is more valuable

than the Wellington Publishing offer—and, more important perhaps, contains a higher cash element —but whether it is sufficiently more valuable for the directors of Blundell Brothers to abandon their understanding with Wellington Publishing may be doubted. In any case, the figures are only approximations. Both b:Js involve an exchange of shares, and the price of the shares of both Wellington Publishing and U.E.B. is bound to fall.

In the last few days U.E.B. shares have fallen from 122 c to 118 c, no doubt in anticipation of this offer. All that may fairly be said at this stage is that the U.E.B. bid is the more valuable. The decision is de jure with the shareholders of Blundell Brothers, but de facto with their directors. There are only about 70 separate shareholdings. virtually all closely associated with the Blundell family. It would appear that about 1.1 million shares are held in trusts; this, is about 37 per cent of the outstanding shares. Although the members of the family, and the trustees, are no doubt free agents, it is almost certain that they will be guided bv the directors’ decision. The directors of Blundell Brothers have a duty to consider the interests of their shareholders. They must also have regard to the public interest Most of the comment on the merger has been unfavourable.

However, the directors of the “Evening Post" have entered into an agreement which they thought, after due and careful analysis, to be in the best interest of their

shareholders. This week-end thev have a difficult decision to make.