Harley wants more for assets

Press, 29 November 1979, Page 20

Harley wants more for assets

The directors of Harley and Co, Ltd, have rejected the takeover offer of $2.40 per share from McKenzie and Willis Ltd. In a letter to shareholders! the chairman of Harley and’ Co (Mr J. R. Maddren) said that shareholders would re-1 ceive a substantially higher! 'income by reinvesting the! cash proceeds of the offer,; but claims that this would! be offset by depreciation ofi the capital sum, because of I inflation, and that there is] no guarantee that present' interest rates will be maintained. The asset-backing of $3.24c on January 31, in Harley and Co. was with land and buildings in the books at 1974 government;

valuation. Mr Maddren says that although the latest government valuations are not available for all premises owned by the company, indications are that these assets have appreciated significantly in value since 1974. “Even the share valuation prepared by McKenzie and Willis’s advisors indicated an asset backing of $3.13 a share. In addition, the assets of the company, and also the worth of your shares, have further increased in value by the profits generated in this current trading year. “It is the asset-backing that makes this offer of $2.40 share look inadequate tend shareholders would be

s'selling their assets for less - than they are worth.” says t Mr Maddren. 5. McKenzie and Willis, - agreeing that the offer is s below the assets backing (does not agree that it is : I the . sole guide to the shares’ worth. i' l In its letter to Harley and 1 Co. shreholders, the com-| pany says that, bearing in i mind the earning capabilities s of the assets, there is no > practical way of offering a Jprice equivalent to the ndt i assets value unless the pur- - chaser was acquiring those - assets for subsequent liquidation. ; “This has been stated as f not our intention, as we are 3 committed to continuing at j least the Greymouth store.

5 “You will no doubt be 3 aware that if you compare market values of shares , quoted on the New Zealand s S t o c k Exchange you : will see that the market ; value of quoted shares is » commonly half the net assets backing of those shares. 1 “We would respectfully (remind you that our offer i price of $2.40 cash a share 3 is 45 per cent more than the >’latest quoted price of your i; shares on the stock ext change. “This is comparable with ; successful share purchase ■ offers such as the purchase of Amalgamated Batteries ’Ltd by Cable Price Downer /Ltd earlier this year,” says ' McKenzie and Willis.